Virendra Pandit
New Delhi: A day after Prime Minister Narendra Modi ruled out a nationwide lockdown to contain the second wave of Covid-19, reassuring the markets, ace investor Rakesh Jhunjhunwala on Wednesday said India’s GDP growth is likely to be in double-digits in fiscal 2021-22.
His remarks matched that of the International Monetary Fund (IMF), which has also exuded similar confidence, although some of the rating agencies, both in India and overseas, have downgraded their earlier estimates of GDP growth, particularly after the outbreak of the second wave of a global pandemic in mid-March.
Jhunjhunwala, who is the CEO of RARE Enterprises, felt that the pandemic is largely an urban phenomenon and that by June this year a good part of urban India would have been vaccinated. “This pandemic is not going to affect rural India”.
Highlighting the government’s commitment to reform and citing how the insurance bill raising Foreign Direct Investment (FDI) limit to 74 percent got approved in no time, Jhunjhunwala, popularly known among investors as India’s Warren Buffet, expressed confidence that the country would record double-digit growth in Gross Domestic Product (GDP) this fiscal despite the second wave of Covid-19 wreaking havoc on lives and livelihoods.
“We Indians are underestimating the determination of Prime Minister Narendra Modi to reform. I thought the insurance bill will get passed in six months. It has never happened that reform is suggested in a budget and insurance bill is passed in the same session,” he said.
In his address to the nation late on Tuesday evening, Modi cited how the second wave has become a “storm” in India but assured that, unlike in 2020, the country was well-prepared to contain its impact and stressed that a nationwide lockdown will not be re-imposed. The state governments will, however, contain local outbreaks by temporarily announcing micro-containment zones. Also, the PM highlighted the ongoing vaccination program as a mega-effort to limit the damage.
Since early 2020, India has recorded more than 1.83 lakh deaths, and the daily new infections in the current second wave have crossed the over 2-lakh mark in the last week.
But the second wave has not shaken investors’ sentiment. Jhunjhunwala said that “We have to take precautions. Lockdowns may be needed. But it is not the end of the world. We are in the midst of a big bull run that started the day market made a bottom of 7500 in March 2020. What is happening now is just a diversion from what is going to be a long ..long ..long bull market that we will have,” he said at the All India Management Association (AIMA)’s Sixth National Leadership Conclave, held as an online event.
He said that markets are reading the second wave’s surge as a “blip” and once the country’s vaccination drive gets further steam, the worry is going to come down. While the human aspect of Covid-19 is tragic, there is also a business aspect, he asserted.
“I would have definitely liked that Covid-19 had not come. But I am not going to change anything in my investing horizon just because of this pandemic. Americans had the best decade after the Spanish flu (in the 1920s). We in India are going to have roaring 2020s this decade,” he said.
He also saw ample scope for the country’s stock markets to rise and noted that India still had low corporate profitability to GDP ratio — only 1.5 percent compared to 9 percent in the US.
Jhunjhunwala expressed the confidence that one day, India’s per capita income will exceed that of China, in the next 30 to 40 years.
