This time of the year is the season of good cheer, high spirits and wishing for a happy new year. Business India also is optimistic of the future and wishes all its readers a wonderful new year.
We have been bullish on the India growth story for long. And have regularly said that the economy will grow and that the markets will do well. That is still our view. But having said that there are concerns that there are also problems that need serious attention before they damage our longer-term growth, prosperity and happiness. On the surface all seems well. The markets are booming. The sale of luxury homes and cars are accelerating, Indians continue to travel abroad. Prime Minister Modi is welcomed in far off lands and the government is rock stable, even though the BJP, not having an absolute majority, is dependent on outside support.
The reality is that growth has slowed down. We seem to be suffering from stagflation – low or stagnant growth and high inflation. Private investment is low, government spending has slowed down, and consumption for the large majority of the population is down, (with over 75 per cent of the population entitled to grain handouts) and manufacturing exports, (except services, led by software companies and GCCs) are amounting to less than 2 per cent of global trade. And apart from the big and some medium scale industries, our industrial growth and industrial employment are lagging. And if one considers growth GDP per head, the picture is sobering.
At the same time, two crucial economic organisations, the RBI and SEBI, are focusing on tighter controls, with SEBI promulgating new circulars every week, finding solutions for problems that do not exist! Meanwhile, our relations with all our neighbours are strained, to say the least. But the Modi government continues to pursue the policies it has been following for the last 10 years as if all is well in India and the world.
Yet the world over we are seeing radical shifts in governance, with major countries in the developed West, whether US, France or Germany, seeing the people all voting for changing the status quo, even if it means voting for untested politicians and policies.
The government has made a start with the PLI scheme which has achieved some notable successes. But if we measure our progress against the rapid changes in the US, or China, or even Europe, our pace of growth and change is lagging behind.
The big issue is how can government help free up the entrepreneurial ‘animal spirits’ that we as a nation inherently have. How can the government enable our people, including farmers, companies and social organisations, as well as our big and small cities, bloom to their fullest?
But change and ideas cannot come from government alone. They must come from our people, including all the organs of society, including business, academia, professionals, state governments and legislatures and even the judiciary!
We wish all our readers a happy holiday season and an exciting new year –different from the usual.