All four funds in the Scripbox portfolio have significant holdings in HDFC Bank. We therefore thought it would be interesting to share with you what the CEO of the bank Mr Aditya Puri has to say in the rupee vs dollar debate.
In an article published in Indian Express yesterday and aptly sub-titled "The economy calls for collaborative action, not despair" Mr Puri says:
- The fundamentals of the economy are not half as bad as the vicious fall in the financial markets would suggest. [GDP growth] of 5.5 per cent seems eminently possible for 2013-14. This is, incidentally, a growth rate that both developing and emerging markets would give an arm and a leg for.
- Current account deficit (CAD) — the one thing that everyone likes to blame for India's woes — is set to improve considerably this year.
- The CAD is not about oil and gold alone. In 2012-13, while the aggregate CAD was 4.8 per cent, the CAD excluding gold and oil was 3.8 per cent. .. Raising import duties, at least temporarily, is a textbook solution for countering a strain on our balance of payments. It is both misleading and irresponsible to describe this as a reversal of reforms.
- The finance minister has clearly drawn a red line below the deficit target of 4.8 per cent. His recent track record speaks for itself. In 2012-13, when most pundits had predicted fiscal disaster with forecasts of over 6 per cent of the GDP as deficit, the actual deficit was just 4.8 per cent of GDP.
- The attempt to defend the slide of the rupee could be self-defeating. Instead, steps to boost growth by creating an environment conducive to investment, fast-tracking infrastructure projects and reducing imports will prove to be far more supportive for the currency in the medium term.
- There is a need for collaborative action but no need for despair.
Full article at the Indian Express website (external Link)
(We thought it would be a good idea to share with our readers the views of business leaders who manage the companies we invest in through the Scripbox portfolio of funds. This is the first of such posts. Please let us know if this is of value to you.)