Can you take us through recent investments in India?
Ghosh: The consumption story remains a major theme. This could be played through various segments. For instance, we have become the principal investor in Ascendas India Logistics Programme, which is investing in warehousing. As consumer demand rises, so will the movement of goods. Therefore, the need for high-quality warehousing will increase. We also invested in Adani Ports during the year.
Venkatesh: In addition, we invested in Ola, which is a play on sharing-economy. We invested in tech company UST Global, which we feel could benefit as companies are increasingly becoming global and connected. We also made an investment in Dr Agarwal Eye Hospitals.
Has your investment stance towards India changed?
Ghosh: In FY18, there was a risk of the US economy being overheated and fears of the US Fed hiking interest rates. There was a possibility of slowdown in the coming quarters. So, we looked at moderating our investments in India on account of the global headwinds. However, the global environment has changed.
Policy makers seem to have recognised the moderation in growth rates, and are considering lowering rates. We have been constructive on India given the strong fundamentals underpinning the economy.
The Budget also seems to indicate an outlook of fiscal prudence. Temasek's exposure to India as percentage of its overall portfolio went up to 5 per cent at the end of FY19, from 4 per cent at the end of FY18.
Some of the Budget proposals have led to concerns among FPIs. What could be some of the ramifications?
Venkatesh: We are not affected by this. We need to figure out how other market participants react. Normally, we look for policy stability and clarity while considering investments. Sure, the government will come up with some clarification.
Ghosh: Fiscal stability and prudence are considerations from the long-term perspective. We feel the Budget has indicated the same. Several factors indicate the economy continues to have robust prospects.
You also have exposure to NBFCs. What has been your view on the sector?
Ghosh: The market is becoming more discerning. Higher-quality and well-governed NBFCs are getting better access to capital. The NBFC space is in a state of flux, and is going through a period of consolidation, which we have seen in other industries. We tend to focus on the long-term picture, given our investment horizon.
The RBI has cut interest rates, but is slower transmission making it difficult to improve liquidity?
: The government is trying hard to ensure transmission. However, there have been other issues, given the liquidity situation of NBFCs. The overall credit offtake has reduced.
There is also a general feeling of slowdown in some segments of the consumer space. However, we feel these are short-term events. Over the next 12-18 months, we expect normalcy to revive.
Has the strong mandate to the Modi government for its second term added to your constructive stance on India?
Ghosh: During its last tenure, the government made important reforms such as the goods and services tax, and reforms pertaining to the NCLT process. We expect the government to continue with its reform trajectory.
Do you feel the NCLT process is taking longer, especially in the case of certain large stressed accounts?
Ghosh: There will be initial teething problems. However, these will be resolved in due course. The NCLT was brought in to deal with issues that have impacted the banking system. Like with any new regulation, it is going through an evolution process.