How pressing is the risk on account of inflation?
Inflation as well as our current account deficit are currently higher than normal. We are funding our growth through imports and foreign capital. In that sense, the economy is overheated. As long as we can continue doing it — global liquidity allows us to maintain this tempo of activity — it should be fine. Right now companies are able to pass on the inflation and the consumer is able to still spend money. It is a manageable situation. But the situation worsens once inflation eats into disposable income and pushes up cost of operations for companies. The firms are then unable to pass on the costs owing to falling demand. This is not good for equity valuations. But we don’t see that situation at least in the immediate future. We have to keep our eyes open for that. That may come six months later or not at all. The P/E ratio of your portfolio is in the thirties. Is it because of a growth focus or are there valuation issues in the broader market? The P/E is a result of the growth orientat
