Macquarie on Budget: Structural expenditure adjustments key

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Richard Gibbs, Global Head, Macquarie Securities says India is facing challenges on the macro economic policy front. "The Budget must see structural adjustments in expenditure."

According to him, energy sector is still a key focus. "Energy usage will continue to increase in India and other emerging markets." He expects Asia to lead the way in the growing aviation market.

To him, the Indian growth story is still a positive one. "As sectors develop in India, we are not likely to see valuations becoming too stretched." He advises investors to use dips as a buying opportunity.

Here is a verbatim transcript of the exclusive interview with Richard Gibbs on CNBC-TV18. Also watch the accompanying video.

Q: Take us through what you are showcasing at the Macquarie Conference starting today?

A: All we are showcasing is really the entirety the sectors in relation to investments in India. This is the very first time Macquarie Securities has staged and all encompassing, all sectors, Indian securities conference. We did this in other jurisdictions and it really reflects the importance we now placing on the development of Indian market and the investment prospects for that market. So this will provide institutional investors with an opportunity to hear from the chief executives officers, the chief financial officers and the chief operating officers about their companies - about their business strategies and their growth prospects.

Q: What do you expect to hear from the large investors who are attending - some degree of risk aversion or seeing this essentially as an opportunity to buy - the dip that we have seen in India over the last few weeks?

A: I think most investors by and large are saying the dip that we have seen as an opportunity to buy. In the longer-term and structurally the Indian growth stories is a very positive one. We have seen in the last couple of weeks substantial upgrades to the growth forecast for India for 2010. The market consensus now is for real gross domestic product (GDP) growth of 8.5% - some people are even talking as high as 9% in 2010.

That certainly augurs well for growth in earnings, for companies growth overall. I suspect most investors are going to be looking at this as an opportunity to increase their exposure to one of the two leading global economies in relation to the recovery in the global economy in the aftermath of the global financial crises.