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In a chat with Business Standard's Nikunj Ohri and Arup Roychoudhury, the new CII president and Bajaj Finserv chairman Sanjiv Bajaj shared how to deal with global headwinds and increased input costs
Q1: The govt has deferred the plan to privatise public sector banks, as the legal amendments have not been made yet. Do you think privatisation of PSBs is an idea whose time has come? Do you think the RBI should relax criterion to allow corporates, especially those with experience in finance business to participate in the privatisation process?
Ans:
>India needs a larger, stronger, Atmanirbhar financial services sector
>It is for the regulators to decide the right way to achieve a strong financial services sector>Good-quality corporate players should be allowed to enter the financial services industry>RBI should build a discussion around what the future of lending looks like Q2: There have been hiccups in the current privatisations of PSUs that have been announced recently, like Central Electronics Ltd and Pawan Hans. Do you think that process should be strengthened and rigorus criteria should be in place to screen bidders for other PSUs as well that have been put on block?Ans:>Need a transparent, clear well-thought-out consistent process for privatisation>The intent of the government is, it should not be in business>There are sensitivities involved. So, some of these things take time Q3: Post FDI hike in insurance, do you think more needs to be to attract foreign capital in the sector?Ans:>Don’t have a domestic financial sector that is strong enough to support India’s growth opportunity>India can become the manufacturing hub of the world, because of the changing nature of geopolitics>Foreign capital finds the best risk-reward geography over a period of time>Capital must help create a strong domestic financial services industry, led by banking, asset management, insurance and pension Q4: What more financial sector reforms need to be undertaken in India?Ans:>Expand banking to increase financial inclusion>Need to take banking closer to people, and digital tools can make a significant benefit>Need to provide capital to small and medium scale enterprises and explore export opportunities>With the government signing FTAs, we need to ensure capital is easily available to companies>India needs few large banks to strategically help large companies that have built necessary capabilities and are looking to build new capacities overseas>Insurance sector has gathered a large amount of assets, which need to be put to productive use>Move assets from govt securities to fund startups, infrastructure projects and create a viable corporate bond market in India Q5: Mr Bajaj, CII has given a range of GDP estimates for FY23 based on three oil price scenarios. In this scenario of 7.4-8.2 per cent growth rate, do you think growth may be closer to the upper end or lower end?Ans:>If oil price stays around $100 level (per barrel), then I think closer to 8% is what we can look at>Rise in the interest rate and how often it happens will depend on the prevailing inflation>Inflation is partly dependent on fuel prices>Govt should cut taxes on fuel in a collaborative manner between the centre and the states>A normal monsoon is expected this year, which can arrest inflation Q6: What sort of a magnitude of impact of inflation are you seeing India Inc going face on its margin?And:>Impact of inflation on margins will differ from sector to sector>Corporate margins have got compressed partly, in the last two quarters, because of rising input cost>That’s why some amount of price rise is passed on to the customers