Hemendra Kothari who straddled the investment banking and the securities market like a colossus for 40 years has seen the transformation of the Indian economy from control raj to the current liberalised regime. In an interview with George Mathew, Kothari, who is retiring from DSP Merrill Lynch later this month, spoke about the state of the economy, recovery, capital market, interest rates and foreign inflows. Excerpts:

•When do you see a turnaround in the economy? Is it linked to the recovery in the US?

When compared to the US and other countries, we are relatively better off. We’re not in recession. There’s only a slowdown. We have to thank the Reserve Bank of India and the finance ministry for not hurrying up in liberalising the financial sector. I complement them for this. I think the RBI wanted Indian institutions to become stronger before opening up the segment. We have come a long way since the country started opening up the economy in 1991. India is on a march. I won’t be surprised if the turnaround takes two or three years to happen. Of course, it’s linked to the recovery in the US.

•The capital market has been struggling for the last one year and investors have made huge losses. When will the situation change for the better?

Investors are getting cautious, and they are getting risk averse, just like lenders. Investors have lost heavily. When the market goes down fast, it reacts also. That’s why we see some recovery taking place. I think things will change. I hope confidence will come back soon. Regarding foreign institutional investment, I feel India is the place to invest. They would come back sooner than later.

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