There is a high expectation that when the government changes, the country will start moving ahead. I just came back from the United States and met many big investors. Today, people feel among the emerging markets, India is the best place, provided the government gets its act together. For that, the immediate need is to get the economy back on track.
All the emerging markets are weakening while India has still got strength. (India and Indonesia have seen steady foreign investment in recent months.) Brazil is going through a difficult time; investors are not willing to invest in Russia; there are question marks about China too. Hence, the western world would like to invest in India.
We have to give the signal that foreign direct investment (FDI) is encouraged in India. If there are certain issues such as FDI in retail, the final decision can rest with individual states, but let there be FDI. A clear signal has to go out, not only in retail but also in many other sectors where foreign investment was supposed to be allowed. This will increase confidence in the system.
For instance, we have to create more jobs in manufacturing. We can do this through FDI as banks are clogged up; there is no money available with banks which are starved of capital because of large non-performing assets. The government will have to find a way to infuse capital in public sector banks so that the economy starts moving again and manufacturing growth improves.
The Land Acquisition Act has to be reversed to boost manufacturing. I don’t know how this will be done, but the government needs to find a way, otherwise we will be stuck. Infrastructure projects that have been halted or where no decisions have been taken have to be dealt with. The right groups have to be reached out to when it comes to awarding subsidies, a fair chunk of which goes to people who don’t need those subsidies. Why should I get one, for example, on diesel?
Check out our Festive offers upto Rs.1000/- off website prices on subscriptions + Gift card worth Rs 500/- from Eatbetterco.com. Click here to know more.
(This story appears in the 30 May, 2014 issue of Forbes India. To visit our Archives, click here.)
No doubt that India is indeed a Ray of Hope in an otherwise battered World economy. India\'s fundamental economic strengths were always there, even when other economies were becoming the cynosure of Investors\' eyes, but only now can look forward to an era of clarity in policy making and empowered steps towards achieving a world class infrastructure: a prerequisite for economic growth. I am not sure a ban on mining exports is such a major issue - considering that India herself is one of the largest markets for such consumption, but yes, Value added exports should be the primary focus here. A wider manufacturing base will take care of un-employment and create a feel good factor about the Indian economy. But the biggest worry is how to get inflation under check - which still is an issue for about 65-70% of people in the country. Controlling inflation will result in the uplifting of inputs that are inherent to the strength of the Indian economy. There\'s nothing magical about western investors, but if we can convince our Indian diaspora - we won\'t be needing anybody else\'s monies. Not that we won\'t welcome those, but just to make a point more elaborate!on May 27, 2014