Would you say the Indian economy has turned around during Modi’s tenure?
There are several areas where the government has meaningful accomplishments, including sectors such as roads, power, coal, railways and a new bankruptcy law. FDI is sharply higher, India has enhanced global visibility, and the government is relying on more intensive use of technology to improve financial inclusion and cut subsidy leakages.
Is the pickup in growth what investors expected?
Given the domestic and external headwinds, the pickup in economic growth, turnaround in private capex and employment generation haven’t been what investors initially expected. However, this shouldn’t be surprising as prior expectations were unrealistic.
Have expectations been too high?
There is a bizarre expectation that anything less than a 100 per cent strike rate is a failing grade for Modi. This reflects exceptionally high expectations of him, desperation for change by voters, and faith in Modi’s ability to transform the economy. The fact of the matter is that no government can deliver on everything, and Modi doesn’t have a magic wand. The government is on the right path, although the pace of change could be faster and broader in coverage.
Is 2016 a crucial year for India’s economy?
India is a $2-trillion economy that is experiencing gradual and uneven turnaround even as it contends with multiple domestic and external headwinds. The real economy reacts more slowly than the rush-to-react social media. While macro stability continues, the pace and magnitude of job creation have to improve. This is important as, in its absence, India’s demographic transition could become a liability instead of a widely expected dividend.
The choice of successor to Raghuram Rajan, the respected Reserve Bank of India governor, will also affect investors’ perception of how his path-breaking initiatives will be carried forward.