HDFC Chairman Deepak Parekh today warned that emerging markets are likely to remain shaky for the next 18 months, and said the Reserve Bank of India's (RBI) measures have failed to spur economic growth.
"Emerging markets are going to be shaky for the next 18 months. RBI measures like increase in Liquidity adjustment facility, CRR and marginal standing facility have not done well to the economy," Deepak Parekh said, expressing his views on economy at Motilal Oswal Annual Global Investors' Conference.
He said the money is going out of the country and the confidence level internationally is down, because of which the rupee has witnessed a sharp decline.
Deepak Parekh, however, sounded optimistic about the domestic economy and said that with a good monsoon, agriculture growth is projected at 4 percent this year, which will help GDP growth by 50 basis points.
"This year agriculture sector will perform much better and it might ease the food inflation. We have five times more wheat and three times more rice than buffer stock required this year. India is a consumption based economy and we can achieve 5-6 per cent growth rate in the near future," Deepak Parekh said.
He pointed out that the infrastructure is not ready to roll out food security; the states are yet to decide the beneficiaries.
On the outlook for banking sector, Deepak Parekh said the long- term picture looks positive and the sector has a huge growth potential. Bank penetration will improve as the number of branches are expected to double in the next 10 years.
He said some bottlenecks have been removed in infrastructure development, and following the State Electricity Boards' restructuring, their balance-sheets will look better in coming days.
"State elections will give us a trailer to the picture next year. I feel elections will not be pre-poned and there is a lot of speculation about who will run the country next year," he said.
Diesel subsidy in the composition of fuel subsidy is highest, under-recovery of diesel was more than 5 per cent, and the government has no other option but to increase diesel prices, Deepak Parekh said.
On Land Acquisition Bill, Deepak Parekh said land will become more expensive as a result, but it will be available and farmers will get better compensations.