HDFC Bank chairman Deepak Parekh has predicted that the economic crisis due to the coronavirus pandemic will be completely different than the 2008 global financial crisis and said that it will take India nine months to recover from it. Addressing a webinar on Friday Parekh said that the real estate prices in the country would fall around 20 per cent at least, thus, leaving many companies bankrupt.

"Land is a state subject. Real state prices will come down 20 per cent at least. Developers who have bought land at high prices will take a hit on the projects. Many companies will go bankrupt, MCHI- Credai must talk to the government for a one-time restructuring like in 2008. It will take 8-9 months for things to normalise for real estate," Parekh said.

HDFC chairman Deepak Parekh
HDFC chairman Deepak ParekhReuters

The deadly coronavirus pandemic, which has killed more than one lakh people and infected over 1.6 million, has rattled the economies globally. India, where several sectors have already been facing a big slump, will also take a hit as the pandemic has forced the country to shut its businesses and services except essentials. The virus has killed over 250 people in India with more than 8,000 positive cases. The country remains in a 21-day lockdown that is very likely to be extended for at least two more weeks.

Poor needs to be supported more

The HDFC bank chief said that the government should support the poor more since they are the ones who the first affected and last to recover. He also expected the government to come out with another stimulus package next week and urged them to do away with "complicated tax rules".

Restarting manufacturing post lockdown would be a difficult task

HDFC BankReuters

He warned that after the lockdown it would be a tough task to restart the manufacturing as the labours would be in a tough situation to choose between life and livelihood. He suggested that to manage this, the labour manufacturing firms will have to incentivise them to return to work.

"You will have increase wages for workers to incentivise them to come back. Getting back will be a problem... Management has to guarantee them the security of life, food and stay if required. They should be your first priority," he said.

Parekh said that getting the cash flow back should be the first priority and suggested cost-cutting, reduction in salaries and downsizing. "Management has to become more prudent by Cutting Costs, downsizing, No increments /bonus. Getting cash flow back should be first priority... Cut costs, reduce salaries, prune manpower if needed," he added.