Jamie Dimon, JP Morgan's chief executive, may have put his foot in his mouth when he said he was "smarter" than US President Donald Trump earlier this month - which led to him being called a "nervous mess" by the latter - but there is no denying his Wall Street cred. He is, after all, the man that steered the company through the 2008 crisis, making it the only large US financial institution to post a profit while large investment banks such as Bear Stearns and Lehman Bros collapsed. So Dimon reaffirming his confidence in India is great news.
In an interview with The Economic Times, Dimon said that India's world beating economic growth as well as critical reforms such as GST and the first step in bank mergers are advantages that far outweigh fears arising out of macroeconomic imbalances and a sliding currency.
What makes him so positive on India? "An educated nation at peace, fixing its problems with strong companies that are growing around the world. It has a population that is growing, political leadership which is strong, with constant reforms and improving. For most countries across history, rule of law, education, and improvement of institutions on a continual basis help them become successful," he told the daily.
So JP Morgan has "gone from covering and providing research on 20 companies to over 125" while the headcount has gone up from 5,000, when Dimon first came to India, to nearly 34,000 people currently.
"We now have close to a 1,000 clients here, which is a mix of multinationals coming in, big domestic firms, global and domestic investors and financial institutions. We work with Indian companies around the world, in China, Brazil, a lot in the UK, and we think that over time, these numbers will continue to grow dramatically," he added.
Significantly, he gave the thumbs up to the current government. "You have a very strong and smart prime minister. He is strong enough politically to take the actions that India needs, which is hard to do. If India wants to reach its potential, those actions need to be taken," he said, adding that India was not unique in red-tapism. "Even in the US we have things that impact our growth. It takes 12 years to get permission to build a bridge".
His endorsement comes at a time that the rupee has been setting new all-time records and foreign institutional investors (FIIs) and foreign portfolio investors (FPIs) outflows reportedly stand at a record Rs 51,591 crore in the year so far. Although the country registered an 8.2% increase in GDP in the first quarter of this fiscal, the Modi government has been facing flak from the opposition over its economic management."That is a mistake," said Dimon. "Currencies can go down when the economy is growing. When the rupee goes down, it also means that you are going to export more. Of course, imports also go up so there are pluses and minuses."
Acknowledging that the depreciating rupee has posed a challenge for the country oil import bill, he also pointed out that "India could do fine if rates go up in the US".
Furthermore, Dimon claimed that despite rising interest rates and the sell-off in emerging markets, there is no threat of another Lehman-like crisis, crediting regulators for raising capital buffers as well as the reduced leverage in the system. According to him, it is absurd to believe that the economic woes of a country would extend to all the countries in this rising rate environment."People have financed more rationally. It will cause dollar rates to go up. If we have good growth and dollar rates go higher, people's borrowing costs will go higher but it is a business cycle and not every country will be the same," he added.