‘Slowdown in Economy But Temporary in Nature’: Deepak Parekh

File photo of HDFC Chairman Deepak Parekh

(Photo Courtesy: Twitter/BabubhaiVaghela)

HDFC Chairman Deepak Parekh on Friday, 2 August, said that there has been a noticeable slowdown in the economy, but added that it is “temporary” in nature as there is adequate demand for assets across the country, reported PTI.

Parekh was speaking at the 42nd Annual General Meeting in Mumbai, where he told the shareholders, “While there has been an across-the-board slowdown in consumption, given the inherent demand and low penetration levels, I believe this is temporary in nature.”

Parekh said the problem got compounded with the tight liquidity situation that has prevailed since last September. This impacted the non-banking finance companies and housing financiers in particular, and he blamed it on banks’ aversion to risks.

“Banks are reluctant to lend and there has been a flight to safety where a select, few, high rated NBFCs and HFCs have access to funding, while for several others, access to credit has been chocked.”

Deepak Parekh, Chairman, HDFC

Due to this, a number of NBFCs and HFCs have curtailed disbursements. This, in turn, has had spillover effects into a number of other sectors.

He is of the view that it is “critical to re-instil the confidence in lenders to support growth in the economy,” adding that “one is hopeful that normalcy will be restored soon and by the time the festive season sets in, some of the risk averseness should taper off.”

There remains adequate demand for affordable housing across the country, which is supported by the government’s flagship credit-linked subsidy scheme and incentives provided to developers to increase the supply of affordable homes, he added.

Parekh also said that the demand for commercial real estate has been buoyant, especially across the top eight cities.

“One is seeing increased demand for commercial real estate, particularly from the IT sector, e-commerce and professional and services sector,” Parekh said, adding that even the demand for retail space has picked up in certain pockets.

Of late, several investors such as pension funds, sovereign funds and private equity players with deep pockets have evinced interest in the country's commercial real estate sector, he said.

He said the challenge in the housing sector has been with the upper middle segment and high-end luxury housing.

“It is this segment where unsold inventory levels are high... this is where the price of the apartments are typically upwards of Rs 2 crore,” he said and added, “I would like to reiterate that the demand for smaller sized homes at affordable price points is still strong.”

(With inputs from PTI)