'We have a startup India, now we need a scale-up India'

Edelweiss Group chairman Rashesh Shah believes one reason why risk-taking by the private sector isn't coming back is because promoters are wary of taking on debt even though equity is available. Shah tells Shobhana Subramanian the new generation of businessmen prefers to invest in existing business rather than set up capacity on their own.

- Shobhana Subramanian

RASHESH SHAH, CHAIRMAN, EDELWEISS GROUP

We seem to be in a virtuous cycle, what would you say are the key risk factors? 

I think Indian economy has scale at $4 trillion but there are a couple of risks. One is inflation, local and global. India has always been highly vulnerable to inflation, which affects our oil prices, even the political commentary borrowing as well as by inflation.

Why is it taking so long to get the animal spirits going in the private sector?

DA Also, the balance sheets of the lower middle class and the rural households are broken. They've borrowed more for consumption which is a risk because ultimately their discretionary consumption is going to be affected by the We need to get the private capex going, for which we need risk-taking behaviour because ultimately the government can take over only so much amount of capacity. While animal spirits are coming back, most companies are doing brownfield projects, acquiring existing assets or de-bottlenecking. Promoters want a much faster pay off on their investment, they are not willing to take a three- or five- or seven-year view on investing. That is what I call real animal spirits where people are optimistic about India.