A recent survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), involving nearly 450 CEOs from different sectors and regions, has revealed that India Inc.’s expectations from the new government are unprecedented at least in the last 20 years. These expectations range from revival of economic growth to fixing inflation and bringing down interest rates and unemployment within few months from the day our new Prime Minister takes charge.
Experts believe that the Indian economy is riddled with key problems that range from huge fiscal deficit, persistently high level of inflation, slow growth, and shrinking industrial output. The most important economic indicator requiring immediate action will be inflation. There are other issues also related with infrastructure, security, foreign policy, corruption and, law & order that need equally decisive and quuick actions.
The steep rise in the stock markets is perhaps a very strong proof of this soaring expectation level among different segments of the economy- stock markets, industry, trade, multilateral institutions, foreign investors and even various diplomatic missions as they would like to reinforce their economic agenda with India.
Foreign investors have pumped in around $5 billion in the share market and we are already seeing the impact of that money. They hope that the new government will be investor friendly and boost the economic activity. Both Sensex and Nifty are touching newer heights everyday, despite the fact that nothing has changed fundamentally for India’s economy, only goes to indicate that India Inc.’s crazy high expectations from the new dispensation in Delhi. The rupee has started appreciating which may not be a good sign for those who are dependent on exports.
More than the government, a lot will also depend on how global factors play out. Certain other policy issues like the environmental ones relating to mining etc. would also have an impact. It will be too much to expect that the new government is going to change something substantially or turn the economy around on its head. There cannot be a sudden spike in growth or control on inflation due to the new government.
Last but not the least, all the above expectations are based on India Inc.’s key assumption that Narendra Modi will be the new prime minister and he will be in a position to provide a stable, efficient and strong forward-looking leadership that is primarily what India desperately needs today. What happens if this assumption – though realistic and widely accepted – itself turns out to be wrong. Because in politics, anything can happen. No one ever thinks it will until it does.
Best of luck to Mr. Modi, in advance.