India in a sweet spot; private investment uptick soon: ICICI CEO Chanda Kochhar

Davos: Expecting Indian economy to continue to improve, top banker Chanda Kochhar Tuesday said India is in a "sweet spot" amid the global economy witnessing a low-growth and low-inflation environment. 

She said private investments are expected to soon witness an uptick but strengthening the institutional framework is also important to support stable and sustained high growth in the economy. 

"In this regard, measures like GST and Bankruptcy Law are important steps," Kochhar told PTI in an interview here at the World Economic Forum (WEF) Annual Meeting. 

Asked about her outlook for Indian economy, especially in the wake of continuing problems in China and other global headwinds including from low commodity prices, the ICICI Bank Managing Director and CEO said, "I expect the Indian economy to continue to improve, building on the macro-economic stability that we have achieveachieved and the various policy initiatives of the government which will drive new growth opportunities". 

She further said the world economy is experiencing "a low growth low inflation environment". 

"India's fiscal situation has improved due to reduction of fuel subsidies on account of lower oil prices. Lower commodity prices have led to an improvement in the current account deficit and also reduced inflation levels in the economy," Kochhar noted. 

According to her, there also exists considerable potential for investment in infrastructure and other sectors and the government has increased its capital spending to improve the investment cycle in the economy. 

"Government reforms are being implemented to attract capital and support economic growth. And finally, India enjoys strong demographic dividend to be harnessed and also provides a large domestic market," Kochhar said. 

As implementation of reform measures and the various initiatives announced by the government begin to take root, it will lead to rapid growth and also have a multiplier impact on new investment opportunities and consumption in the economy, she added. 

When asked about comments from IMF, World Bank and the top government leaders that India is the bright spot in a gloomy global economy, Kochhar said she agrees with those views. 

"Yes, I agree that India is in a sweet spot today. India's macroeconomic parameters indicate a strengthened external position and improving domestic economic conditions. However, to strengthen this position further, the domestic investment cycle should pick up," she said.

"The government has been playing a key role in this regard and has increased public capex spending, between April-November 2015 (and) government capex spending increased by over 30 per cent.

"An investment push by PSUs will also help the investment cycle, given their size and position in the industrial value chain," Kochhar said.

Capex by PSUs would trigger matching investment downstream by private firms, lifting India's investment cycle, she noted.

According to her, the government is also supporting new initiatives and has articulated their commitment to growth-friendly policies, administrative efficiency and ease of doing business. These will stimulate private investments going forward, she added.

"The mix of growth contributors is another factor which needs to evolve. India has so far primarily been a services driven economy.

"Going ahead, manufacturing needs to pick up momentum in order to bolster our growth path and to provide gainful employment to our growing workforce. The National Manufacturing Policy envisages a significant increase in the share of manufacturing in total GDP by 2020," Kochhar said.

On some key reform measures getting stuck due to political reasons and what is the level of concern that the global investors are voicing on this, Kochhar said, "I don't think investor queries are in anyway reflecting concerns with regard to the growth potential in the economy".

"Foremost, India is in a better position today compared to even a year ago and in a stronger position even compared to other emerging market economies.

"Secondly, the government has clearly articulated its commitment to growth-friendly policies and reforms that are being pursued with timelines where possible. This clear direction in itself gives a lot of confidence to investors that the economy is being prepared for the next phase of sustainable rapid growth," the ICICI Bank chief emphasised.

Stating that critical reforms are on the agenda, Kochhar said it is a matter of time and "we should see more such action taking place that will smoothen the growth process".