India story intact: Kochhar, Kamath differ with doomsayers

Amid a growing number of industry leaders expressing anguish over policy paralysis, top banker Chanda Kochhar has said that people are talking more about challenges while taking the positives for granted.

Kochhar's mentor and ICICI Bank Chairman K V Kamath has also sounded an optimistic note. In his latest letter to ICICI Bank shareholders, Kamath said he is confident about a "robust and sustained (economic) growth over the medium to long term".

Stressing that the reality is a little better than the sentiments, Kochhar, CEO and Managing Director of ICICI Bank, has said that global situation was not the "big reason" for the current situation and "a lot of it is in our own hands."

"... but we all tend to talk more about challenges and take the positives for granted," Kochhar said in an interview published by global investment banking giant Morgan Stanley.

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Incidentally, in another interview published by Morgan Stanley, top business leader and IT giant Infosys' co-founder and former chief N R Narayana Murthy said that India's image has suffered over the past 3-4 months and the country was suffering from challenges that were "self-inflicted."

A growing list of corporate leaders have been expressing anguish over lack of policy initiatives by the government.

They include IT major Wipro's Chairman Azim Premji, top banker Deepak Parekh and Aditya Birla group's Kumar Mangalam Birla.

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Standard and Poor's has already warned that India risks losing its 'investment grade' rating due to "slowing GDP growth and political roadblocks to economic policy making".

HDFC chairman Deepak Parekh has also said in his annual letter to shareholders that it is the "lack of political will" that was holding India back and investors can no longer be placated by talks of "long-term fundamentals".

Parekh had said that most of the recent problems "have been self induced - lack of fiscal rectitude, uncompromising coalition partners, inability to gain consensus on crucial legislation, stalled reforms, corruption scandals and a sense of apathy towards foreign investment."

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Kumar Mangalam Birla in his message to Idea Cellular shareholders has said that the "the biggest overhang (for the telecom sector) is the regulatory environment in the sector which are detrimental to the sector's future".

Kochhar, however, has said the "investment driver is there for the long term and appears to be structurally strong because every investment that we are talking about comes from the need for that particular capacity.

"If we give confidence about the investment climate and on the fiscal path, investments will start coming in and then that takes care of the exchange rate, liquidity and equity flows – it starts a nice virtuous cycle but these are two enabling factors."

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ICICI Bank chief said that there could be a slowdown in the pace of investments in immediate term, but long term potential is intact and "therefore the long-term story continues to be strong."

She further said that India could easily grow at 9-10 per cent level over the next 5-10 years.

"What we are achieving currently is mainly driven by consumption. If investment comes back, there is easily another 3 percentage points or so that we can add to the growth rate. We have the potential to get there, provided we do things right," she noted.

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Asked about most of the people not sharing her optimism, Kochhar said: "We have to remember that our sentiments are driven by the immediate factors, whereas when we talk about countries and their long-term stories, we have to look at the long-term structural factors.

"If you look at the current sentiment, and assume that the current sentiment and pace of investment will continue to stay with us, then we cannot get to 8-10 per cent growth. What I am saying is that we have the potential to get there. If we do things right we can get there."