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Madhabi Puri-Buch, MD & CEO, ICICI Securities
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'2009 to be most painful for Indian economy'

February 18, 2009

Text: Prasanna D Zore

2009 is likely to be the most painful year for the Indian economy, prophesies Madhabi Puri-Buch, managing director and chief executive officer of ICICI Securities. However, she is optimistic that the two fiscal stimulus packages announced by the Indian government will have a positive impact on the economy, the results of which will surface in 2010.

In a freewheeling interview with soon after she took over the reins at ICICI Securities, Madhabi Puri-Buch discussed the current economic scenario, the impact of recession on India, the reasons behind foreign institutional investors not finding India attractive anymore, and the solution to the housing problem in India in the backdrop of rising real estate prices and interest rates showing some degree of volatility.

What's your assessment of the current economic scenario? Everybody's talking about recession. Are we slowly slipping into a recession?

There is actually no doubt about it. The numbers (GDP) have come in. Almost all the economies across the world are showing negative growth and it certainly is a full-fledged recession. I don't think there is any doubt about that anymore.

The expectation is that perhaps in calendar year 2010 we will feel the positive impact of fiscal stimuli doses injected by various nations on the global economy. But at the same time there is worry that while growth will come back there could also be a significant impact on inflation and interest rates. If this happens simultaneously it could be a really difficult period.

However, in India we are fortunate that a large part of our growth comes from domestic demand. Agri sector has done well -- the rabi crop sowing is over now and is expected to be much better than the previous kharif crop as well as much better than the previous rabi crop. So we expect agri sector to grow well.

Manufacturing, perhaps, may see a little bit of a problem. Overall, the general consensus is we will close this year at 7 per cent (GDP growth) and next year possibly in the region of 4 to 5 per cent.

Image: Madhabi Puri-Buch, MD & CEO, ICICI Securities. | Photograph, courtesy: ICICI Securities

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