Job creation and leaving money in the hands of the people should be the two top priorities of the government, says Keki Mistry, Vice-Chairman and CEO of HDFC Ltd. Consumption being 60 per cent of the Indian economy, he said recovery and growth efforts have to be led by boosting consumption.
“The cost of lowering taxes would not be too high whereas the benefits from higher consumption would far outweigh the revenue loss to the government,” Mistry argued. He pointed out that while the corporate taxes had gone down, the peak rate for individual tax rate had gone up from 35 per cent to 44 per cent. The executive suggested that the government should identify the job creating sectors and address their issues on priority. The housing and real estate sector was the biggest employer in the economy after agriculture, and 80 per cent of the workforce in the sector required minimal skills, Mistry highlighted. Most of the job losses during COVID-19 were confined to low-income workers and the job losses for the kind of people who borrow money were not alarming. He said the non-performing individual loans could be in the range of 2.5 per cent to 4 per cent, which is also the extent of loans that RBI has allowed to restructure.
In regards to the pace of economic recovery, Mistry said the Indian economy had proved resilient. “The worst is behind us and the recovery has been faster than expected. By the end of December, the economy would be at the pre-COVID levels for most sectors,” he said. “The December quarter growth could be better than the growth in the December quarter last year.” However, Mistry said a lot depended on whether another virus wave hits in the winter. The executive pointed out that the government was very much aware that India could not afford another lockdown.
