ET has now caught up with KV Kamath, chairman of ICICI Bank, over his expectations of Narendra Modi’s government and the budget. fragments:

ET Now: Speaking of Narendra Modi expectations, don’t you think too much hope and money is essentially chasing one man? Despite his good intentions, there are structural problems in the economy and not even the prime minister really has a magic wand?

KV Kamath: If you look back 10 years ago, even with all the structural problems, the economy grew almost double digits. Now you have a leader who has a known bias to fix things and make things work. It’s the same set of structure, the same set of people driving this. You have the right leader who can make the effort.

ET Now: Recently we had Mr. Birla met with the finance minister and when he left the meeting, he said he expects the economy to recover within three to six months. He says he is now going to invest in India. We haven’t heard many business leaders say that yet. You can feel the mood of business in India. When do you think business leaders will start investing?

KV Kamath: The first feeling comes from the market. It is the collective wisdom of the market that there is action and we will act quickly. That improves the confidence level of the industry. Now we need to see if some of the ground conditions necessary for people to return to an investment mode are going to change. Today I read that a large number of reforms or stalled projects will be tackled in the coming days. When that happens, you see, as it were, a reversal in the investment mindset.

ET Now: It could happen itself in three months. Is that what you think?

KV Kamath: I think it could happen between three and six months. But we want incremental investments to take place. In the first half of the year there is enough to harvest in terms of stalled projects and so on.

ET Now: The only clue that business in India is also on the lookout for is the budget. Given the nature of the mandate we have, the strength that this government has in Parliament, would you expect hard reforms in this budget itself?

KV Kamath: I don’t want to call or doubt what someone is doing. But I think it’s going to be a budget where you’re trying to have fiscal discipline and whatever it takes to get that discipline. Now to what extent, in what combination, is up to the government to call. I think people will look for budget discipline in the budget and for a way to get the deficit under control, for example over a three-year period. If it’s well constructed and well articulated, you’ll see the cheers soar.

ET Now: Does the 4.1% number seem a little tricky to you?

KV Kamath: If you eliminate waste, you eliminate what is theft and eliminate what is unnecessary, the 4.1 is achievable.

ET Now: When do you think fiscal and monetary policy will start working together? When do you expect the rates to change?

KV Kamath: When it comes to monetary policy, we always say let’s look at the constructive design of a budget deficit. We know what it is and where it will end. If they see that construction as it were, for this year and say two years on the line, then I would think they should have more confidence to tinker with the rates or inflation itself will have to go down. We see that different people have given different solutions, starting with releasing food supplies, pressing the pedal on the APMC reform, and so on. I am sure again that this is something that the government will understand very soon and take any steps or some steps that would give policymakers confidence to cut interest rates. We should see it happen in this fiscal year, in the next 12 months. I think it should happen in the first six months.

ET Now: A quarter percent or more, over the course of the year?

KV Kamath: I’m not entitled to this. Let’s see what happens. It will all depend on where the deficit figure comes in and whether you are able to bring inflation down. If these work out positively, the rates can evolve quickly.

ET Now: What are your short, medium and long-term growth prospects?

KV Kamath: My long-term number has no single digit. It’s two numbers. So you can make an estimate.

ET Now: During the term of this administration?

KV Kamath: I think it will happen during the reign.

ET Now: the first term itself?

KV Kamath: It will happen in the first term of this government. That’s for sure. If they make progress the way they want, I’m pretty sure we’ll see a double-digit percentage in the first term of this administration itself.

This post Industry confidence level improving: KV Kamath, ICICI Bank

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