The recently held sixth Horasis India Business Meeting
in Liverpool, UK was largely dominated by discussions around the
new government in India. But how are things going to pan out for
the business community within the country, as well as those
interested in investing/expanding there? Our Nitin Shingala looks
at what may lie ahead.
From an international perspective, Modi's ascension to the
Prime Minister's office raises a most pertinent question. Will
the new government succeed in rebooting
India's "economic miracle," which has sputtered
in recent years?
The Indian economy over the past few years has gone through one
of its worst periods in its history. Growth had plummeted from 9%
to 5%. Sticky inflation, populist subsidy measures, oil price
shocks and a devaluating currency have left the economy in need of
a much needed boost. It is clear that there is no magic remedy for
recovery. Policymakers need to focus on bringing the economy back
on track to ensure steady and sustainable growth.
The Horasis forum was upbeat about India's growth prospects
after the new government took charge, indicating a sharp
improvement in investors' sentiments amidst heightened
expectations that the new government means business. Most
respondents exuded confidence about prospects relating to economic
growth, decline in price rise and twin deficits — fiscal and
CAD — recovery in exports, buoyant foreign capital inflows
and strengthening of the rupee.
Participants discussed a set of possible post-election
trajectories. In a vulnerable global economic environment, India
remains one of the world's growth engines. Its outward
engagement with the rest of the world in terms of trade and
investment continues, and it is viewed as a land of opportunity.
The meeting focused on the new government's policies and the
related changing paradigm of the Indian economy. Sustained
structural reforms aimed at enhancing competitiveness will be
necessary to bolster and boost India's economic growth and
ensure the rising prosperity of its population in the
At the Horasis Meeting it was generally felt that a stable
government at the centre will bring growth back to India, along
with a mild upturn in some economic indicators in the form of
recovery in exports, decline in twin deficits, buoyant foreign
capital inflows, strengthening of the rupee and moderating
inflation; this expectation has provided a big boost to business
sentiment. But the forum cited economic uncertainty, low GDP growth
and high inflation as its top-most concerns, highlighting the need
for stepping up efforts to further improve business sentiment and
remove supply bottlenecks.
The new government faces a mammoth task to meet India's
soaring expectations. The participants identified four main
priorities for the Indian economy:
There is a great desire for change, especially among business
leaders, India's youth and the middle class. The new government
will have to slay the bureaucratic inertia which has for too long
held the country back. The economy has to be actively revived.
Reforms have to grow up.
The key sector to watch is infrastructure. Incentives to
nurture public-private partnerships in infrastructure sectors are
essential, acting as stimuli to private investment and faster
growth. Some of the other key focus areas of discussion were,
education, skills development, focus on renewable energy and
opening up government controlled markets in India.
India needs to improve its investment climate. If foreign
investment is to achieve its full potential as an accelerator of
economic growth, there needs to be greater clarity in the approvals
process, and in the legal and tax systems.
India must create 10 million jobs a year - four times the pace
of the last five years - to absorb youth into the workforce. Also,
the education and training of future generations is of the utmost
importance as a factor in collective development.
Overall, the participants of the 2014 Horasis India Business
Meeting felt that there is renewed optimism about the Indian
economy ever since the new government took over. Prime Minister
Narendra Modi's 10-point agenda presented at the first meeting
of his cabinet has been welcomed by everyone and is a good start on
the path of economic reforms.
The participants were upbeat that proactive implementation of
various reforms will help India to realise its growth potential.
This has also been echoed recently by UK Chancellor George Obsorne:
"There is a lot of buzz and excitement about India. Over the
last seven weeks, there is a real sense that India is firing on all
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