How much is the potential of this drama likely to hurt the Indian economy and
indeed confidence within it? In terms of corporate governance and
more? Well, it's a fluid situation, and I
don't claim to have all the insights into the specifics here, but in the
factual territory, what we know and our published fuel from our banks analysts
is that the exposure to the overall banking system.
Domestic and international is about twenty three to four billion dollars as
of March 22. Additionally, Indian banks have about
one third exposure out of this overall on his debt.
As of March 22 and public sector banks within that is about 25 percent.
That gives you about six billion dollars, whereas private banks are about
8 percent, about two billion dollars. But on the overall capital expenditure
story in India, that's sort of underpinned by other macro factors, one
that manufacturing companies in India have deleveraged.
The banking system is well capitalized, take on a credit cycle.
The government, as we have seen in the budget, again, has been very, very
focused on capital expenditure, raising the capital expenditure amount to three
point three percent of GDP, which is more than a 15 year high.
In terms of CapEx and it shows us a 27 percent growth on the revised estimate
for fiscal year 23 budgeted for fiscal year 24.
I just want to know more about Adani yet.
How do you think it's going to change the way people look at, you know,
corporate India here as well? Because we've always had corporate India
having corporate governance, if you will, and which gave it a premium on the
market. It's having another year.
You're an economist fundamentally has done and said, you know, if they had
plans to raise overseas, did that also become problematic because of what's
going on? We think that in terms of the funding of
an investment cycle, if required, the banking system today is in a much
better position compared to what you've seen in the last decade.
So that is the main lever in terms of funding the investment cycles within
India and therefore other entities should not
be finding it difficult to raise debt or borrow from the banking system.
As I said, the capital positions are the best in the last 15 to 20 years across
large private sector banks as well as the public sector banks.
So from from the macro lens. We don't think this should become a
systemic issue for the banking system to fund the credit cycle.
We're seeing the road continuing Danny route erasing half of the group's value
since that Hindenburg reports Antonio. You know, India's growth is contingent
on its infrastructure spending as well. We know that the Adani Group has
committed about 50 billion dollars over the next four years to build seaports,
airports at steel mill. Surely that may cause India some of its
growth. So if you if you look at the India
growth cycle and the investment cycle in particular in India, we are doing about
30 to 32 percent investment to GDP already.
The lever behind that, as I said a bit earlier, are the manufacturing sector
overall having deleverage. So the overall leverage in the
manufacturing sector is low capacity utilizations are coming up.
The government has been the leader in this cycle in terms of capital
expenditure. It's not so much the private sector.
So our view is that as the government sector leaves the capital expenditure
cycle and raises the capital expenditure from about one point seven percent of
GDP is what they were doing in the previous decade on average, you
committing to 3 1 3 per cent of GDP for fiscal year 24.
And the banking system is able to fund the credit cycle.
We should see the investment cycle going from.
From the private sector as well. Now there are considerations of entree,
policy cycle tightening, etc, which won't come into play.
But the investment cycle is based on more fundamental macro factors than one
particular group is what I want to point out.