Narendra Modi is set to take over as the country’s 18th prime minister whose investment community has already started pinning its hope on the former RSS pracharak to trigger growth by kick starting delayed infrastructure projects.
Land acquisition delays, law and order problems, fund constraints and delayed environment clearances caused delay of over 30 percent of the centrally monitored infrastructure projects as on December 1, 2013, according to Srikant Kumar Jena, Minister of State, in February. $160 billion of infrastructure and other projects have been delayed due to bureaucratic and political paralysis, Yashwant Sinha, a senior Bharatiya Janata Party (BJP) member of parliament and former finance minister, said in an interview with ‘Financial Times' in December.
Modi’s past track record shows he is pragmatic and businesses minded, said Darius Pandole, partner, New Silk Route, a private equity fund, adding that a few quick steps by the new government could revive investors’ sentiments. “They could start by targeting low hanging fruits first to get a few victories under their belt. They can kick start infrastructure projects that have been stuck for long periods and by bringing greater clarity on taxation and making policies that are clear and consistent,” Pandole said.
On Friday, Modi led BJP to its biggest victory, with its highest ever tally.
“The prospect of having a stable government that is business minded and can come up with suitable policy actions that are transparent and consistent will kick start growth momentum,” said Pandole. “:Its still very early, no one has a magic wand to create development overnight.”
Meanwhile, expectations are already very high for Modi and investors expect him to take steps that will give boost to the so-called new industries too.
Personally, I want some steps to be taken to increase Internet penetration in the country, said Mukul Singhal, vice president of SAIF Partners, a stage agnostic investment firm. “It needs to be doubled from the current 100 million to 200 million in 2 to 3 years, not 5 years. Infrastructure issues on the Internet side need to be addressed for the country’s digital economy to grow up. If China can do it, so can we,” said Singhal.
Investment bankers, who are usually amongst the first to pick investment sentiments, say a clear mandate to BJP and track record of growth in Gujarat under Modi, is a positive to begin with.
“With a stable government, more predictability is expected in terms of how the government will work with industries,” said Ranu Vohra, co-founder, managing director and chief executive officer, Avendus Capital Pvt Ltd. “Clarity on policies, regulations will prompt companies to put capital into work.”
Meanwhile, Modi may be still a few days away from being a prime minister with the swearing in ceremony expected on May 21, country’s financial experts expect his tenure to be different from others.
“It’s a party with a huge mandate and will not have to face issues of disagreeing coalition partners. I am very confident that his government will be very different from earlier governments and will speed up work and implementation,” said Vohra.
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