JPMorgan’s Kalpana Morparia Says Strategic PSU Sales Can Revive Private Investment In India

India has long struggled to revive its private investment cycle. One way to do this could be selling majority stakes in state-owned entities, according to JP Morgan’s Kalpana Morparia.

Private sector participation will come when the government starts the asset monetisation cycle, the chairman and chief executive officer of South and Southeast Asia at the investment banking firm told BloombergQuint on the sidelines of the JPMorgan Investor Summit in New Delhi. “That’s not only in terms of physical assets like roads and airports.”

The sale of Air India is “the most anticipated one”, Morparia said, adding that there could be a slew of other strategic sales that the government could ready itself for. “You will see private sector participation coming much more in these segments before you see them going into the greenfield projects.”

Still, it will take some time for private investments to pick up, she said. The government will have to frontload a lot of the infrastructure spends they have been planning, she said.

The Worst Is Over

India’s gross domestic product growth fell to a six-year low in the quarter ended June. Private consumption, reflected in private final consumption expenditure, grew by 3.1 percent compared to 7.2 percent in the previous quarter. That coincided with a liquidity crunch in the economy as non-banking financial companies held back on giving loans after the Infrastructure Leasing & Financial Services crisis.

But the worst is behind the economy, according to Morparia. “I believe we have probably seen the worst and you will see a gradual pick-up coming in.”

The private sector banks are “well placed” in such an environment, she said. These lenders do not lack both capital and liquidity, she added.

Some segments of the economy have not witnessed a slowdown, Morparia said. The capital-heavy sectors where consumer leverage was a challenge were the ones impacted, she added. However, segments like travel and food and entertainment continue to “grow nicely”.

“We certainly see a slow pickup coming into the second half,” she said.

India Story Intact

Morparia does not think that India’s growth story will be challenged for too long. The global environment is weak but “it also throws up unique opportunities for India”, she said.

The country is an investment destination of choice for multinationals that are looking to diversify their supply chains, she said.

Although India was slow in catching the trend of pick-up in electronics, it is now working on spurring its manufacturing, she added. Moreover, it’s looking at sustainable urbanisation, Morparia said. “On electric vehicles, the government is thinking far ahead.”

Watch | The one thing Kalpana Morparia thinks can revive private investments in India