“When things are under control on the health side and new investments are coming in, which means more employment being created, it will cause the consumption cycle to grow at a steady pace and not with the kind of volatility that we have seen in the last year-and-a-half years. So, it is not about any quick wins but more about steady investment which will help us get into a steady consumption cycle,” says Sanjiv Bajaj, President-Designate, CII & CMD Bajaj Finserv NSE 2.24 %.

Keeping in mind that we are still seeing green shoots in capex right now, we hope that the government continues with its capex and divestment plans and a combination of this is what gives confidence to the common man. When things are under control on the health side and new investments are coming in, which means more employment being created, it will cause the consumption cycle to grow at a steady pace and not with the kind of volatility that we have seen in the last year-and-a-half years. So,it is not about any quick wins but more about steady investment which will help us get into a steady consumption cycle.

That is quite a loaded question and there is not an easy straightforward answer. But the finance ministry representing the government and the RBI have actually been working in a collaborative way right through the various waves of this pandemic. The messaging is consistent and we have seen both monetary and financial stimulus at various points of time. A lot of it is continuing. India has not seen excess liquidity. India did not put in that much of it but the world, especially the developed countries have put in a humongous amount and the situation has to eventually start normalising. The impact on our markets in the last couple of weeks has been a result of that.

Let me start by saying that from about July or so, we are seeing a steady uptick on the consumption side – both rural and urban. From the middle of December onwards, as the third wave started kicking in, we are seeing some amount of slowdown especially on the rural side but most metrics are working well. So our performance, our risk metrics are all working well right now which is a good sign.
Part of the slowdown we are seeing is that people will be cautious about consumption but more importantly, the fast spread of this variant means that a lot of people have to be at home for one week period. So, just physically, we are finding that the industry does not have enough hands to man business and in many cases, this is what healthcare is also telling us, hospitals are telling us that it is not the severity of the wave, but for a period of time people are just not available.
So that is causing the slight reduction on the consumption side but I am confident that from second half of February or March, this will improve.

As for what we can do to get us back to steady consumption, one is psychological for the consumers. The government along with the private sector has prepared well for this wave; let us continue preparing for the next possible wave and that means open up booster shots for everyone. We have got enough production capacity of vaccines; do the quick studies for mix and match, bring in the new vaccines from outside, let us get proactive on therapeutics to see what works, what does not work. We cannot just go back to normal every time a wave recedes. We have to start preparing for the next wave and as I said, the government has done a good job this time. But let us not assume we would not have another wave because the more confidence we create, that is when people open up their purse strings. So to me, that is the first thing to do.

Second, as we have discussed seeing green shoots and we are going to see capex investment coming by the time the money gets converted into equipment and production capacities ,increase it takes time. So the government must continue with their divestment, must continue with their investment in infrastructure so that continues to give us tailwinds.
The third is really to start preparing not just for the next 12 months, but beyond that and hence significant upgradation in healthcare spends, continued investment on infrastructure and let us start preparing ourselves for a much larger India and hence focus on education, skill building and innovation. Climate change is going to be a challenge but it is also going to provide tremendous opportunity. How can we as a country lead there not just by copying what the West is doing but by innovating and creating our own solutions. So my third point is not something that will give us immediate result but create a longer term pipeline.

Very clearly we can see that private sector banking results and NBFC results have been very strong in the third quarter. They are raring to go and we will see the benefits coming to other sectors because of that. On the public sector side, we have to still see many of the results as it is still mixed.
Wherever immediate support is required via investment, we would urge the government to do that but more importantly, one has to make them competitive. One has to give them freedom to pay the right salaries, to fix their own strategies and for that the government has to divest. We hope that we see these two disinvestments in public sector banks and one public insurance company. That is the direction to take now and then the market would bring its own competitive benefit. I hope we will see a very clear, continued road plan in the Budget.