Extremely low oil prices not to benefit anyone, including India: Uday Kotak
In a chat with ET Now, Uday Kotak, MD of Kotak Mahindra Bank shares his thoughts on the economy. Excerpt:
ET Now: Falling oil prices is generally seen as a boon for India, especially when it comes to meeting fiscal targets. What are your thoughts on this?
Uday Kotak: Anything in extremes is not good for the world. Therefore, extremely low oil prices may be good for India but not so much for some other players. A balance is crucial and it is here that I feel that we run the risk of commodity cycle taking the prices of commodities down to extremes. Balance of politics and economics will play out and we have to be careful because, at times when situations become dire, countries and politicians take extreme positions and India has to prepare itself for that kind of an eventuality. It has to build a strong domestic macroeconomic foundation and in many ways, be able to sustain itself much more on its own strength, rather than depending other countries.
ET Now: But we are not immune – the reception of Indian markets to events in China being a case in point. How do you see Indian markets – which is also in some ways a yardstick of the overall economy – playing out in the days to come?
Uday Kotak: It is a classic transformation of capital account into P&L account. P&L account takes time but India is still making a benefit of $8200 billion a year here. But we are likely to see outflows when it comes to capital account because even now India is clubbed with emerging markets and emerging markets have not performed well over the last five years. Therefore, investors the world over are withdrawing money from emerging markets.