We expect Reserve Bank to cut policy rates by 25 bps: Kalpana Morparia

The corporate tax rate cut is a welcome move and its timing was brilliant, says Kalpana Morparia, Chairperson - South and Southeast Asia, JP Morgan & Co. During an interview with Swati Khandelwal, Morparia said, "The ongoing crisis arose due to chunky corporate exposures, but have been addressed significantly."

The banking sector plays an important role in the growth of the Indian economy. What is your view on India's financial sector, especially banks, and the challenges it may face till we see a turnaround?

The large part of the problem that arose due to the chunky corporate exposures has been significantly addressed or is in the process of being addressed through the Insolvency and Bankruptcy Code. The ongoing stress is mainly in the real estate and non-banking finance sector (NBFC) but its quantum has decreased and dispersed a lot. That's why I don't consider them a systemic issue. Besides, the government has announced several things on this front, and we are also expecting a quarter percent cut from Reserve Bank of India. All this will augur well in terms of giving a growth impetus.

What is your take on the latest corporate tax cut? Is it enough to bring revival in the Indian economy, especially consumption revival?

The corporate rate tax cut is a welcome move and the suite and timing were brilliant. This brings India at par with all other Asian countries, so I think it is going to have an enormous medium- and long-term impact in terms of driving investment. A lot of things have been announced by the government. Now, it is the responsibility of our corporate houses to find the ways to reap benefits of the policy announcement and increase their investment and create a momentum of growth, not just in terms of investment but also in terms of jobs.

Do you feel we have fewer women faces at the top of the organisations, If yes, what are the ways to address this problem?

Securities and Exchange Board of India (Sebi) has framed a rule and Companies Act has a rule as well that you must have at least one woman independent director. I think we should make companies aware in both terms, employment and representation at the Board level, and there is a need to make them not only about the benefits of inclusion of the gender, but also the disadvantage of keeping out such a significant contributor whether it is a workplace or the Boardrooms.

What are your views on our growth rate and by when we will get out of the problem?

India has a vision of being a $5 trillion economy and that can be achieved by keeping our GDP growth at more than 8%. But we grew by just 5% in the last quarter, however, the recent announcements have an impetus to growth. So, the consumption holding up and good monsoon should revive consumption in rural areas. And, both the government and the corporates are embarking on a really strong pipeline of investments, and based on this certainly India will get to its 8% aspiration of growth.

Do you think that the corporate world is reluctant while investing more?

We are better because we have a 1.3 billion home market to address, but any country that aspires to grow at more than 8% has to be a very significant exporter of the goods. India has done very well in terms of export of services. I believe the current policy announcements, ease of doing business and the tax cut would support a lot of supply chain coming to India. There will be a significant disruption in the supply chain from one of the countries that have a disproportionate share. So as India positions itself as a destination of choice to get some of these manufacturing supply chains in its own country. It will certainly benefit our export sector and you have a huge benefit of also servicing the domestic segment.

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