Sonjoy Chatterjee, chairman, Goldman Sachs (India), has been in the financial services sector for over two decades, both inIndia and overseas, and has seen the economic crisis in 1998 and 2008, besides the current slowdown. After wearing a lender's hat in ICICI BankBSE 7.37 % from 1994 to 2011, Chatterjee left it as its UK chief to head investment bank Goldman Sachs' India operations.
"The current environment is not optimal for equity issuances. Globally, due to volatility, the allocation of investments acrossemerging markets is almost at a standstill. When you think of equity markets, India has seen approximately $16 billion of investments since January. Unlike countries in South East Asia, which have seen almost all their inflows leave, India has barely seen $3 billion of outflow and that too is predominantly over the past two weeks. I think this is something to take comfort in," he tells ET. When you talk about outflows, it is predominantly in the debt market... We should note and value the fact that, if global investors saw the future of India story as having fundamentally changed, the outflows in equities would also have been quite substantial, he says.
Is the India story completely beaten down?
India has been through many upheavals in the past. Today, there is indeed volatility in the currency and bond markets and to some extent the equity markets. However, when I think about India over the last two decades, I remember us being a far weaker country trying to deal with volatility in the 1990s, the Asian crisis of 1997 and then the difficulties of the early 2000s.
From a corporate point of view, I note that today the ability of banks to fund through these situations, the robust institutional framework and the government's fiscal and monetary steps taken in the last few weeks, were things India was not equipped to do in the 1990s. So, yes, there is volatility, but, fundamentally, I think India is in a much stronger place today.
But many Western companies have a negative view about India. Taxation issues, slump in demand... Would you agree?
I would say it's a mixed view right now. Corporates are thinking about how best to address India and looking for clarity on issues around taxation, especially those that have a retrospective effect.
Whenever there is volatility in currencies — which has a direct bearing on investments — it brings about a pause in foreign investment. The fact that India will soon go into election mode and, therefore, make a series of policy measures preceding the elections will also have a bearing on how corporates make strategic decisions around India.
At the same time, however, one should look at the level of interest in India from Japan and think of the dialogue that is taking place at all levels of the government and within states, institutions and corporates. Of course, there has been a geopolitical shift, but the level of Japanese interest in India is at its peak now. Despite the volatility in the market, it is not stopping Japanese companies from thinking through what they need and want to do in India. The same can be said about certain sovereign funds. Such funds are already doing the rounds in India to see if the next three months offer a window to make equity investments at the right prices. One may say this is the best time.
Ref http://economictimes.indiatimes.com/opinion/interviews/india-has-the-strength-to-handle-volatility-sonjoy-chatterjee-chairman-goldman-sachs-india/articleshow/22423819.cms
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