Mortgage lender HDFC Chairman Deepak Parekh on Thursday sounded confident of the pandemic-ravaged economy coming out soon, as he expects Bharat to help nurture India back to economic health earlier than the consensus forecast.
Base-case forecasts by many pencil in a GDP contraction of 5 per cent if the lockdown is lifted by July and normalcy trundles back from September, and over 7.5 per cent in the worst case as each month of the lockdown shaves off 100 bps of the GDP.
"Signs of the wheels of the economy beginning to churn are evident from the following facts: unemployment rates have tapered down from their peaks in May, e-toll collections are higher, as are e-way bills, digital transactions and GST collections which are back to the Rs 90,000 crore levels.
"Demand for two-wheelers and tractors have risen, even though passenger and commercial vehicle demand remains subdued on the back of the timely onset of the monsoons," Parekh told the shareholders at the 43rd annual general meeting of HDFC.
Advising people not to get too perturbed with the forecasts of negative growth, he said the economy will recover for sure assuming that there are no further lengthy and complete lockdowns in future.
"Since the Independence, we have had recessions only thrice – 1958, 1966 and 1980 and all of the three was caused by poor monsoons which hit agriculture… Today, the bright spot for us is the rural economy. A good monsoon, strong agricultural growth and government support through rural employment guarantee scheme is enabling rural consumption to lead the overall recovery," Parekh said.
He also discounted the impact of the lockdown-driven work-from-home culture on the commercial realty, saying that many large companies are using the lockdowns as a good opportunity to snap up good properties when the prices are low.
Listing out the reasons for his optimism, Parekh said that there is a misconception that demand for commercial real estate will diminish with more opting to work-from-home. However, many large companies have in fact acquired or leased commercial properties during this period, particularly in Bengaluru and Hyderabad.
"And also there is demand for real estate from newer sectors like warehousing, e-ecommerce companies and from cloud and data centre parks as they seek to increase their data storage capacities."
On the housing sector, he said the inherent demand for home loans continues to remain strong and the combination of low interest rates, fiscal incentives and softening of realty prices bodes well for new homebuyers.
He called up on the states to offer some sweeteners for home buyers by giving a temporary stamp duty waivers apart for helping migrant workers to return to their workplaces as the hit on the commercial realty is largely due to massive reverse migration of labourers, which is making resumption of projects a challenge.