India’s Prime Minister Narendra Modi is all set to meet the industry leaders on September 8 amid global economic turbulence: the global markets are at a low and China is reeling under an economic crisis. Apart from the global economic scenario, non-implementation of many major reforms promised by the government is likely to be discussed.
Some of the major issues faced by the industry such as ease of doing business, investment bottlenecks and poor credit growth have been expressed by the industry leaders in the past few days. While grandiose plans have been announced, there is not enough concrete action on the ground to back it up. Many industry leaders have begun expressing dissent with the functioning of the government and feel that the government is high on promises and low on delivery.
Major tax reforms such as the Goods and Services Tax (GST) which was promised by the government has still not been passed by Parliament and the land reforms have not been implemented after the government cancelled the ordinance it had passed. With major infrastructure issues grappling the country, weak GDP numbers (though it is better than other emerging economies) and a slow pace of reforms, the government is certainly not on a strong wicket as far as the industry is concerned.
The crisis in China has rattled global markets. India has also been impacted a bit with the devaluing of the yuan. The sentiment among exporters is not very strong at this point as exports have been falling over the last eight months. Despite the crisis in China many see it as an opportunity for India. It would be interesting to see if there is any roadmap laid out by the government to tap into the sentiment and create an opportunity.
Big ticket announcements such as ‘Make in India’, ‘Digital India’ are not adequate when basic infrastructure issues plague the country. The government will have to find ways to improve electricity supply, land acquisition, tax administration and clearance processes. The much touted cooperative federalism about improving Centre-State Relations has not shaped up as hoped.
The meeting comes at a crucial time and the government will certainly face pressure from the industry leaders to push for major economic reforms and take concrete action on the ground rather than just announcing big initiatives. It is left to be seen if the government pushes for major reforms over the next few days after it reassures the investors about its commitment to bolster the economy.
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