James Gorman, Chairman and CEO of Morgan Stanley, sixth largest bank in United States and one of the largest investment banks in the world has said they will invest more in India. He praised the development in the country in recent years, successful efforts of financial inclusion, emphasis on technology and focus on infrastructure. “It (India) is on the cusp of becoming the fifth largest economy in the world, replacing the UK. The changes to bankruptcy laws, the opening up of more foreign direct investment, (and) efforts being made to put a much larger percentage of the population have banking account relationships…. The technology being developed to identify people through thumb prints and eye scans, the building of infrastructure across the country,” said James Gorman in an interview with Economic Times.
James Gorman also spoke on the fall of the rupee and said that this is result international events and not due to domestic problems. “I don’t read the move in the currency as a reflection of economic management at all. The rupee trades on account of what the dollar is doing and not on account on what the rupee is doing right now. So, I do not take that as a criticism at all by the financial markets of the economic steps taken by the government. It is an unfortunate consequence of what is going on outside India,” according to the Morgan Stanley CEO. Media and opposition were criticizing the Modi government for the fall of rupee while economist has repeatedly said that rupee depreciation is due to international events. Raghuram Rajan, Arvind Subramanian, Sanjeev Sanyal and many other respected economists has warned that RBI and Modi government should not take unnecessary big decisions to prevent the fall of rupee. They had also said that rupee is overvalued and central bank should let it slide/appreciate to its natural value without sharp volatility. However, the rant of opposition and media continues on the fall of rupee and Congress even called for an unsuccessful ‘Bharat Band’ on the issue.
On the question about views on Modi government, Morgan Stanley CEO said, “the clarity of action is very exciting. Decisions have been made. The clarity and willingness to make decisions, the foresight to recognize that you can through technology jump over various stages of development…I think these are very positive. The government brings a business mind-set of getting things done inside the social fabric of ensuring that the society stays a cohesive society.
I think they have done a really good job.” Morgan Stanley CEO also praised Insolvency and Bankruptcy Code (IBC) for brining transparency in India business environment. “Having a strong bankruptcy regime is obviously essential to having a robust credit banking system. It builds trust. Basically, what financial institutions always want in the market are transparency and certainty. They want to know why things are working the way they are working and when things go bad or good, there is some certainty about the outcome. And I think the bankruptcy code is integral to that,” said Gorman.
International CEOs are pouring in praise for Modi government. A few months back Cisco CEO said that India could lose momentum if Modi government does not get reelected. Multinational companies had invested very good amount of capital by betting on Modi government. The reforms like IBC, GST brought fundamental changes in the economy which increased confidence of investors in India. The transparency in business environment and strong macroeconomic fundamentals also forced global rating agencies to increase rating of India economy. The positive assessment by international business leaders suggests that foreign investment will grow exponentially in upcoming years.