Besides the sordid Sheena Bora case, Tuesday’s news was dominated by a meeting Prime Minister Narendra Modi held with top CEOs, bankers, economists and Ministers. The meeting sought to find ways to bolster the economy amid the global slowdown and find ways of taking advantage of China’s recent slump. The slant taken by most news outlets was the prime minister’s reported proclamation that industry must take risks and increase investments. Suffice to say, it is an unusual pitch. Why should business houses invest in India, if the business environment is laden with risks? However, for the sake of fairness, there is an implicit admission by Modi that India’s business environment is still fraught with risk. Attracting FDI, or foreign direct investment, was one of the key promises made by the now one-year-old Narendra Modi–led government. In an exclusive story, this newspaper reported that the prime minister’s international trips to 18 different countries in the last one year have managed to trigger an amazingly large FDI equity inflow of $22,275.91 million. However, the bottlenecks to doing business smoothly in India persist. The government has tried to fix the food economy but with little success. Key reforms like changes in the APMC Act and the creation of a national agricultural market remain out in the cold with no action worth note being taken on them.
Further compounding the government’s problems is the fact that some key macro-indicators do not look good. Bank credit growth is at a 21-year low, besides the uneasy rise in Non-performing Assets. The corporate industry has been hesitant to make fresh investments and growth prospects for existing businesses are failing to get better. In response, several industry leaders pitched for an interest rate cut saying it would help them take risks and scale up investments. However, according to a majority of bankers surveyed by a consulting from EY, the level of non-performing assets (NPAs) in Indian banks is only going to worsen in the next few years. Before more credit is doled out, the Centre must get a handle on the impending credit crisis. Although, the IMF still views India as a bright spot among emerging economies, other doubts continue to persist. Experts have claimed that economic growth is being impeded by the poor quality of economic data coming out of the Centre, in addition to job cuts and a deficient monsoon, which has adversely impacted consumer demand. Although India is in a much better shape than it was under the previous government, the current ruling dispensation has been aided by cheaper commodities, as demand from China has slowed and crude oil prices fallen. Moreover, the government has been unable to pass legislation required to enhance India’s growth prospects like the Goods and Services tax and labour reforms, among others. There is still a long way to go before India is open for business, irrespective of China’s troubles.