The Economic slowdown in India, underlined by the weakness in consumption demand, is temporary in nature and will pick up at the onset of the festive season, said Deepak Parekh, Chairman of mortgage giant HDFC.
“While there has been an across-the-board slowdown in consumption, given the inherent demand and low penetration levels, I do believe this is temporary in nature,” Parekh said in HDFC’s annual general meeting held on August 2.
He said that the demand for commercial real estate has been buoyant across the top eight cities and is coming from the IT sector, e-commerce, professional as well as services sectors.
Parekh added that several investors have evinced interest in the commercial real estate sector. These include pension funds, sovereign funds and private equity players with “deep pockets.”
However, unsold inventory levels are high in upper middle segment and high-end luxury housing where the price of the apartments is above Rs 2 crore. On the other hand, the affordable housing segment continues to see strong demand.
He said that the challenge is re-instilling confidence in lenders to support growth, since they have limited funding to select high-rated non-banking finance companies (NBFCs) amid a risk averse environment.
“As a result, a number of NBFCs and housing finance companies have curtailed disbursements. This in turn has spillover effects into a number of other sectors,” Parekh said.
This is not the first time that Parekh has allayed fears of a slowdown. Earlier last month, in a note to HDFC shareholders, Parekh said that the economy was facing “short-term challenge” and that the poll outcome was a “strong mark of confidence.”
On the contrary, top private lenders and corporates have expressed concerns over deepening slowdown. The International Monetary Fund has cut India’s growth rate projection for FY20 by 30 basis points to 7 percent. Ratings agency CRISIL also revised its growth estimate downwards by 20 basis points to 6.9 percent.
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