Economic activity in India is beginning to reach levels seen before the pandemic, but further acceleration is needed to fully offset the pandemic’s impact on the broader economy, State Bank of India (SBI) chairman Dinesh Khara tells Joel Rebello and MC Govardhana Rangan in an exclusive interaction.
What is your sense of the state of the economy after a visible acceleration in the pace of vaccinations?
Our in-house business activity index is at pre-pandemic levels. But to come out of the damage of the last 20 months, activity levels have to be much stronger. There was already a tendency to slow down before the pandemic; so having come to pre- pandemic is positive but it is not good enough. The rate of growth has to be much higher because cash flows of many businesses have to be repaired.
Private capital investment has not really picked up for many years. What are the trends you see ?
Of late, we have been observing that some of the sectors, particularly iron and steel, aluminium and other core sectors, have actually hit the rope on capacity utilisation. We are seeing some green shoots in terms of new investments; so it is a major departure from pre-pandemic levels. I hope the construction sector takes the lead in terms of being a major growth driver and linked to that will be iron and steel and cement etc. So these sectors will take the lead. The recent government initiatives in terms of chip manufacturing and also the various production linked incentives (PLIs) that have been announced will also support capacity creation.