Assured of a stable & functional govt

May 23, 2015 10:57 pm | Updated 10:59 pm IST

N. Srinivasan, Vice-Chairman and Managing Director.

N. Srinivasan, Vice-Chairman and Managing Director.

At the outset, I would like to congratulate Prime Minister, Mr. Narendra Modi and his NDA Government on completing one year in office.

Before NDA Government was swept to power with a decisive mandate in the Lok Sabha poll in 2014, the country faced enormous problems.

There was a setback to our growth, caused by external issues like slowdown in the world economy and domestic factors such as widening current account deficit, high inflation, high interest cost, policy paralysis or logjam, stalled projects and series of scams. I would say all these adverse developments had crippled business confidence and investment activity.

Naturally, following the landslide victory by NDA and Mr. Narendra Modi taking over Prime Minister, there were expectations of radical change for improvement by his Government.

I would say considering the kind of serious problems the country had faced then, it would be difficult for anyone to turnaround the ship overnight. It is only fair to give the Government some more time before its performance is judged objectively.

Having said that, I would say we are assured of a stable and functional Government. I would like to appreciate the problem solving approach of the Prime Minister.

The PM is heading in the right direction to provide a good and responsible governance. He is trying to bring about transparency in decision making and administration. He has infused confidence in the minds of officials while making the bureaucracy accountable.

In the last one year, outlook for our economy has improved and we reasonably insulated from ‘external shocks’. By undertaking a whirl wind tour to several countries, largely aimed at improving our diplomatic and bilateral relations, the PM has totally changed the perception of world in favour of India. I can say no one would have marketed so aggressively ‘Brand India’ like Mr. Modi.

Our macro-economic conditions have reasonably stabilised raising hopes for regaining the growth momentum. Global commodity and crude prices have considerably cooled helping the country to cut current account deficit to 1.3 per cent of GDP. It was as high as 4.7 per cent in 2012-13, when the economy faced a serve slow down.

Also, fiscal deficit has been tamed at 4 per cent even below the targeted 4.1 per cent. Both core and retail inflation rates have eased prompting the Reserve Bank of India (RBI) to cut repo rates twice. In the last one year, FIIs have pumped in nearly $43 billion lifting our forex reserves to a record high of $343.9 billion in the last one year from $303.7 billion in 2014.

In a short span, PM has rolled out some major reform measures. These included relaxing the FDI limit in the Insurance sector and defence, easing the rules for FDI in construction, allowing FDI in railways, passing the black money bill in the Parliament and rolling out some labour law reforms.

A noteworthy achievement of this Government is that it has made its coffers richer by over Rs.3 lakh crore following the auctioning of coal mining blocks and telecom airwaves.

The PM has created Nitti Aayog as a new think tank in the place of Planning Commission and wants to make States a part of India growth story.

It is true the business sentiments are still weak. Industrial growth is fragile having clocked only 2.8 per cent growth in 2014-15 (2004-05 base year). The expected pick up in domestic demand and recovery in investment cycle has not yet materialised.

This along with sluggish exports, have affected capacity utilisation in a number of industries including cement. Credit growth is low and primary market (IPO issues) is in a slumber.

While opportunities have increased for Indian companies to raise capital from abroad, corporate earnings are yet to improve. India Inc is grappling with high debt burden, high interest cost, higher freight and power charges.

The Budget has its thrust on infrastructure development, “building 100 smart cities, housing for all by 2022, and new initiatives such as ‘Make in India’ aimed at boosting our manufacturing sector, ‘skill India’ and improving India’s ranking in the World Bank’s ease of doing business index from an abysmal 152 to 50.

Till the time business confidence picks up and private corporate sector embarks on fresh investments, the Government is trying to kick start growth through public investment of Rs.1.25 lakh crore on infrastructure, roads and other sectors as envisaged in the Budget.

While PM is doing his best to revive investment and growth and create value for natural resources such as coal, limestone deposits and airwaves, it is hoped he will find a solution to the stumbling blocks being created by ‘local activists’ and ‘vested interests’ in getting timely approval for projects from authorities and Green Courts.

(N. Srinivasan is the Vice-Chairman and Managing Director, The India Cements Ltd.)

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