Monday, November 29, 1999

A man for all seasons

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It's a good thing the financial world still has access to Deepak Parekh's thoughts and insights; in his latest report, he's come up with new ways to tap money to make India's infrastructure build-out a reality. The HDFC chairman believes India may be finally taking off and tells Shobhana Subramanian that speedier decisions from the government could do the trickDeepak Parekh has just completed another job for the government. A team led by him has come up with suggestions on where we can find some money to build all the roads, power plants, airports and ports that the country needs. Among the new ideas that have been thrown up is one to rope in foreign insurance and pension funds. Not that the chairman of Housing Development Finance Corporation (HDFC) is glad that it's over. That would be quite unlike Parekh. But ever since he stepped down as the executive chairman and managing director of the country's best-known home loan company, Parekh has been taking more breaks than he used to—on a recent trip to New York, he did nothing for a few days. And, he also managed to find time for a week's holiday with friends at a game sanctuary in Botswana.As he admits, staying away from work doesn't come easily to him. About a couple of months before he was to hand over the reins at HDFC to successor Keki Mistry, Parekh did apprehend that it wouldn't be easy to let go. After all, he had been with HDFC for more than 40 years. Indeed, if it was hard for the financial world to imagine Parekh not being in the thick of things, it was probably harder for the 65-year-old Parekh, who's been a trouble-shooter for the government on several occasions, not to interfere in the working of HDFC. "I've been coming to office every day, but I'm slowly learning to let go.I'm travelling more so that I'm out of the office and can't interfere, but I must spend less time in the office," he says. In fact, even now he's reluctant to spare time on a weekday, so it's on Saturday mornings that he catches up with The Financial Express at his office near Churchgate in Mumbai.He does seem more relaxed though, probably because he's flying out that night and is probably hoping to be able to take some time off, though it's an official trip. Fortunately, as Parekh says, he's still fit enough to travel. "When I was 60 I felt like 40, so I'll probably feel like 45 when I turn 65," he had said before his 65th birthday last year. At the time, he had also talked about HDFC foraying into education, partly because he had been saddened by the fact that his alma mater, St Xavier's, was no longer among the top schools in Mumbai. Parekh believes that it should be possible for HDFC to run schools in many of the housing complexes that it funds. Not elitist institutions, but schools catering to the middle-income groups. Parekh, much befriended because he's a trustee with the Bombay Scottish School, says there hasn't been much progress on that front.More or less satisfied that the infrastructure build-out is happening and especially confident that the PPP (private-public partnership) model is working well, because the government has enough clout to be able to take over the assets in the event of a disagreement, Parekh says the focus needs to be on urban transport. "We need to think of metro projects in cities like Bangalore and Hyderabad and add more routes in cities where there is already one. The future is in underground rail and metros, but then urban transport costs a lot of money," he says. Nevertheless, it's hard to be bearish on India right now, isn't it, I ask, or am I missing something? No, asserts Parekh. "I think we are on an extremely good wicket. We are on the radar of every international company, we are in a privileged position where the world is not growing, but we are still showing 7.5% (GDP growth) and anticipating 8.5% next year or even the current year. India is discussed in the boardrooms of every multinational company; they want to associate with us either by selling to us or manufacturing here. I think we're in a good position; it's an affair of the heart and the head too," he laughs.So, have we arrived? "We have been trying to arrive for a very long time, we're always in a take-off stage but never taking off. I think this time we are taking off. I hope so," Parekh sounds optimistic, though in a minute he's back at ground level. "We also need to improve a lot of things, especially bureaucracy. Look at a World Bank report on the ease of doing business; we are still at the bottom of the chart when it comes to things like contract fulfillment or the number of permissions, and we haven't made any attempt to improve these things. Why is the global perception of India so poor that they believe it's impossible or very difficult to start a project? Why is there an impression that it is impossible to close an offer? We are at number 140 or 160."So what are the risks that could derail growth? Terrorism, says Parekh, both external and internal, which, he says, is possibly here to stay and which could derail growth. "We need to handle this and the government is making all efforts to do so. But at the same time, I think we need to concentrate a little bit on regional growth. What's happening is that pockets that are growing well are growing more and our growth is becoming lopsided. Why, for instance, can't we give tax-free status to industries coming up in Bihar or UP or West Bengal? Sacrifice some revenues and say any company that puts in Rs 50 crore or more will not have to pay taxes for five years. This is being done, but we need more of it so that we have more equitable growth;there is some financial inclusion taking place through various schemes like NREGA."Parekh tells me about an interesting change that came through in a recent survey that HDFC conducted in rural India. Across the country, he points out, it's not housing that is among the top few requirements, but education and health that are a priority for rural households. In contrast, in urban India, housing is the number one priority. "In rural India we found that they only wanted space to store grain, they weren't really too concerned about housing. It's education that people want." Do you see India changing a lot in the next few years? "It'll take 20 years," he says, rather wistfully, sounding somewhat weary and disappointed that it should take that long. It would be nice, he adds, if the government took policy decisions faster, appreciating the fact that arriving at a consensus is difficult in a coalition government. It becomes difficult for the private sector to move ahead unless the government takes a call on policies. "We would like to go public with our insurance company, but unless the FDI limit is raised to 49%, that will be difficult," he says.But then Parekh's not one to dwell too much on the unhappy side of things and he recovers almost instantly. "I'm very optimistic and happy these days," he says. Given that he's able to spend more time with granddaughter Amaya, he must be very happy indeed.

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