What is your view on the months gone by?
As far as handling the pandemic is concerned we have actually done very well. Even though the number of coronavirus cases are still going up, as it will in a country with 1.3 billion people. If you look at the severe cases of coronavirus we have been able to manage that very well, the healthcare system has done very well.
“If you look at the severe cases of coronavirus we have been able to manage that very well, the healthcare system has done very well.”
The second aspect is the relief package. The relief package has had a dramatic and very substantial impact on getting people through very difficult times. Now we are moving towards the revival part and here in the revival part I would say unlike every other country in the world where the focus has been primarily on relief, we have balanced it with a number of steps on the revival part. We are very well-positioned for a strong revival.
Has the economic restart been moving smoothly?
Economic activity was put on a temporary pause from March 24 till June 1. Agriculture continued, basic services continued, the remainder 40% to 50% was put on pause. Post June 1 we were able to get supply chains working, we were able to get retail operations working very smoothly.
“Govt has taken a calibrated view towards providing relief. The PM and FM have also said that we will take calibrated steps and we will preserve some gunpowder and as and when sectors need additional help.”
The policy actions taken around the world have been unprecedented and in India as well. All of these things have been done to ensure that when the revival comes, it comes in a way that there is no permanent impairment to the economy. There is a pent up demand for resuming normal life.
Is there a need for a helping hand for the services sector which has been hit hard by the pandemic?
There is a section of the economy that is still affected deeply – airlines, construction, real estate, hospitality. Now, there have been a number of steps that have been taken. MSMEs have been protected. The loan restructuring by the RBI will help sectors deal with the stress. The government has taken a calibrated view towards providing relief as well. The PM and FM have also said that we will take calibrated steps and we will preserve some gunpowder and as and when sectors need additional help going forward, they will be provided support.
You were involved in this JAM trinity. Is the system robust enough?
From a relief perspective whatever was required in terms of cash support, the government has provided that and it is extraordinary how well the whole JAM trinity worked. If we had not done the work we did in establishing the DBT system and banking the unbanked, we would not have been able to get through these difficult times the way we have.
“If we have thousands of crores we can have our unicorns funded largely by our own institutional investors as opposed to relying on Sequoia and private equity like Blackstone.”
What are the issues you are dealing with in the Standing Committee on Finance?
We have had two meetings post the pandemic. The first meeting was on growth financing because investment is crucial for us in revival and to make sure that our startups and our fast growing companies have sufficient equity and debt capital available. Then we had a meeting on credit flows.
Could you elaborate on the growth financing issue?
Essentially the goal here is we need to be able to encourage more domestic capital going into alternative assets. We have domestic capital going into public markets. It’s very important for private financing, venture capital and private equity that we need to have a level playing field. The gap now is that we do not have the domestic institutional investors that can enable us to create venture capital funds. If we have thousands of crores we can have our unicorns funded largely by our own institutional investors as opposed to relying on Sequoia and private equity like Blackstone.
About 80% of the venture capital that has come in for the larger deals is primarily from outside India; it needs to be 50:50. So, we really need these larger funds which are domestically created so that we can scale up. We have to allow our pension funds, endowments, insurance companies to be able to invest in these large funds. Certain regulatory amendments are required. Those are some of the recommendations that we have made.
Faster that we can fund these, more the investment that’s going to happen and faster will be the economic growth. To drive growth, we need growth financing coming domestically so that we are not dependent on vagaries of global capital.