Get set for a vibrant India!

December 2014
Generally, the sensex has a strong nose. Last year, at this time, it had kissed 21,000 and was shying away from maintaining a perch there. The hesitation in breaching the peak was the result of the conditioning created by a government that had stepped on the brakes rather than the accelerator. Now, within just six months of the new government under Narendra Modi, the sensex has crossed 28,000 reflecting the buoyancy in optimism in the economy.

To be fair, last year at this time, the government had moved into repair mode with the Prime Minister and Finance Minister setting up the Cabinet Committee on Investment with a Project Monitoring Group (PMG) under Anil Swarup to remove bottlenecks in stalled projects involving an investment of Rs 1,000 crore or more on a time-bound basis. The PMG has cleared 163 projects worth Rs 5.7 trillion so far, of the 450 projects worth Rs 22 trillion that have been brought under its consideration. But the bottlenecks on fuel linkages are still in the process of being resolved as the Supreme Court cancelled the allotment of 214 coal blocks that, in its view, were granted in an ´ad-hoc´ manner. Following this, within a month, the government has brought in an ordinance spelling out the procedures to reallocate the cancelled mines. The ordinance, put up on the Coal Ministry´s website, details the process the Central Government will follow in taking over the mines that had been allocated to privately owned and public-sector power, steel and cement companies between 1993 and 2010. It further lays down the provisions for public auction of the mines by way of competitive bidding, specifying who is qualified to bid.

Breaking this deadlock could be cited as a critical example of a decisive government at the helm.

There have been several other measures taken to rebuild the economy back to its vibrant place after tottering for the past three years:

  • The government administration is working: Ministers, bureaucrats and government officers are being pulled up for dragging their feet.
  • Crony capitalism is out: Touts are barred at ministries and ministers hesitate to meet businessmen unnecessarily. Most processes are being laid out transparently.
  • Transparency is being encouraged: All processes are up on websites. Online updates of information are being encouraged. Even tracking files for clearances is a click away.
  • Improvement in India´s international image: Modi´s visits to Bhutan, South America, Japan, the US and Australia, not to mention the visit by the Chinese president, have enhanced India´s image and standing in the minds of international investors. Japan has committed $35 billion and China $20 billion over the next five years.
  • Divestment plans on the anvil: The government is all set to cash out after liquidating its holdings on the stock market, thereby giving its kitty a boost.
  • Jandhan scheme to provide for social security and financial inclusion: Banks have opened 6.5 crore accounts so far and mobilised about Rs 4,857 crore as deposits in these accounts.
  • Expediting projects: The PMG has an expanded role and is now tasked with following up on timelines set for ministries and states. It had been set up to clear 463 projects worth Rs 2.20 lakh crore. While 176 proposals have been approved so far, only 60 have begun construction.
  • Improving ease of business conditions: India ranked 134 of 189 economies in the World Bank´s Ease of Doing Business 2013 index. The Department of Industrial Policy and Promotion, which is driving the campaign, has set up an eight-member expert panel for quick grievance redress and to answer queries. Further, several outdated laws are being repealed and the Factories Act for less than 40 workers has been simplified to facilitate SMEs.
  • Focused approach: The government is targeting investment in nearly two dozen sectors, including electronics, automobiles, civil aviation, defence, railways, tourism, hospitality and wellness. Special emphasis is being given to FDI, manufacturing policy, industrial corridors and intellectual property rights.

Having created momentum with reforms at the Centre, Prime Minister Modi has now rebuilt his team of ministers; those that did not perform have already been shunted out and new ones have taken their place. Opposition parties and alliance partners have been ´shown the door´ whenever they have tried to create hurdles for the ruling government. Tough decisions like diesel decontrol, gas price hike and ordinance for reallocation of coal mines have already been taken and now the Finance Ministry is also likely to take a final view on the Shome panel report, which had favoured prospective application of tax laws in its report on retrospective amendments relating to taxation of indirect transfers.

The construction industry has been at the receiving end for the past two years, which has partly been its own doing. But now, even though orders on the ground remain a trickle, the pipeline is building up - it´s time the industry shed its back-foot hustle. The industry needs to bring to the fore the latest in technology, efficiency, systems and processes to match the mood of the government and earn its place in the sun. India will be a vibrant economy in 2015-16 - believe it and get set.