Interview | ‘Will see more asset monetisation, inflows in chemicals, bio pharma’: Anuradha Thakur

Economic Affairs secretary Anuradha Thakur expects foreign capital inflows to improve on the back of Budget measures that have been unveiled and is confident that the growth momentum will sustain. Excerpts:

Given the challenges that the economy faces, how do you see the growth-inflation dynamics playing out in the short term?

■ I do see core inflation stabilising but we don’t want inflation to reach those highs again because it really hurts the poor. It has rightly been called the “Goldilocks moment” by the RBI governor (Sanjay Malhotra). We can manage the growth that we are aiming at because I would probably call it a stimulus kind of approach that govt has been following year after year, referring to the high capex levels and also the uptick that I’m seeing in private investment.

Under the flexible inflation targeting mechanism is the Centre comfortable with headline inflation as anchor for the monetary policy committee and has the 2-6% worked or does it need to be narrowed?■ The plus minus 2% range has worked for us. Second, in terms of headline or core, the thought process has been that it has held us in good stead. Headline inflation reflects the lived experience of inflation better than core inflation. We would think that there is a case for continuing with that.

Do you see an improvement in inflows given what is happening around the world?
■ I’ll make a distinction between foreign direct investment (FDI) and foreign portfolio investment (FPI). FPI, by its very nature, is cyclical and we are right now in a cycle in which FPIs are pulling out. Some of it is because of the fact that they have had a good experience in India and they are repatriating their profits. Hopefully, from those jurisdictions there will be more inflow as the cycle turns. There are other things as well, including interest rate regimes in other countries, high valuations, which has also allowed them to book profits. But the valuations are also moderating.

On the FDI side, gross flows have been stable and high. Net FDI, at different points of the year, has either been neutral or a little bit below or even sometimes a little bit higher. Powering ahead with the kind of interventions we have tried to make in the Budget, the sectors that we have chosen with care, should attract a lot more FDI in the year. Chemicals and biopharma are sectors where we hope to see significant investments.

On asset monetisation and divestment, what is the way forward given the fact that there are plans to raise Rs 80,000 crore in next financial year?■ Secretary DIPAM has said that the target includes asset monetization as well. Asset monetization has also developed as a route for monetization. Sector specialists say they are also feeling more confident about how to monetize. This year probably we’ll see more asset monetization.

We specifically identified CPSE REITs (real estate investment trusts) because it is our thinking in DEA at least that we build buildings to be able to sit in those buildings. You don’t have that stream of rental income that can be made into a REIT. There are mechanisms through which you can do that, which is why we announced it. We will now be sharing what we have learned with DIPAM and department of public enterprises so that they can take it forward. We hope that after a few pilots that will open up this significant chunk of assets. Not land, but buildings that you’re sitting in.