Focus On India’s Inherent Resilience, Says Deepak Parekh

Parekh applauded measures to boost the domestic manufacturing sector, including production-linked incentives, with an emphasis on new and emerging sectors. “We need to seize opportunities arising from companies that are pursuing a China plus one strategy,” he said.

Refuting detractors of India’s manufacturing story, Parekh said critics are missing efforts to create high-end manufacturing capabilities in the country.

On the global outlook, Parekh said that as the U.S. battles inflation, the rest of the world is facing the double whammy of inflation as well as dollar strength, “A strong dollar benefits American consumers who buys foreign goods, but for the rest of the world, the dollar strength is causing severe imbalances.”

The HDFC chairman invoked the IMF to call for prudent use of forex reserves to guard against possible future shocks and intervene only to ensure macro-economic stability.

“This means allowing exchange rates to adjust, whilst using monetary and fiscal tools to align the inflation rate nearer the target rate. To my mind, the RBI has been extremely prudent in its exchange rate management,”

“We have never seen a free fall of the Rupee and the present currency depreciation is not a reflection of a change in the fundamentals of the Indian economy,” he said.