India′s economic jigsaw falling into place

The cogs of growth are now mostly in place. The Narendra Modi government, which came to power on the promise of transforming the Indian economy, has, over the past two and a half years, made several important structural changes that should begin to show results over the coming quarters.

It has, for example, passed the Bankruptcy Code to speed up liquidation of sick companies, is well on the way to legislating the Goods and Services Tax (GST), which will stitch India's 30 states and seven Union Territories into one common market and ensure a digital trail of transactions that will make evasion and corruption that much more difficult and early in November, demonetised high value Rs 1,000 and Rs 500 notes to strike at the heart of India's shadow (black in local parlance) economy that feeds off and encourages crime, evasion and corruption. The expected extinguishing of about $70 billion in currency notes - and, in effect, government liability of an equal amount - is expected to lead to a 100 basis points (bps; 100 bps = 1 percentage point) cut in interest rates over one year that should help growth rates move up sharply.

Energy Justice Over the past few issues, ′India Investment Journal′ has featured individual ministries and ministers who personify the Modi government's “can do, will do” attitude. This time, we feature an interview with India's young petroleum minister Dharmendra Pradhan, a first time entrant into the Council of Ministers, who has proved sceptics wrong by rising to the challenge of transforming, within a short time, a moribund oil and gas sector he inherited. I particularly commend the fact that the government, under Modi, is moving beyond the concept of mere energy security and focussing on energy justice.

In a related article, Vikram Mehta, Chairman and Senior Fellow, Brookings India, points out how, “the officials were comatose (and) saw less risk in the act of omission than the act of “commission...” I also draw your attention to our story on Madhya Pradesh's progress to the upper echelons of best states to invest in. Under the dynamic leadership of Chief Minister Shivraj Singh Chauhan, the state has moved from industrial obscurity to investment leader within a span of about a decade. We have recorded this progress in our State Focus segment this time.

Post-Trump Landscape The most important news dominating global headlines is the election of Donald Trump as President of the US. While there is concern about how his protectionist campaign rhetoric will translate into policy and how this will impact India, John Chambers, Chairman US India Business Council and iconic chief of Cisco, is optimistic that the countries can and will fulfil the potential that many see in this relationship. Did you know, for instance, that the US holds more official dialogues with India than with any other country He quotes Prime Minister Modi to reiterate that the “two countries have overcome the hesitations of history by forging a strategic alliance rooted in our guiding principles of freedom, equality and democracy". Read on to delve into his vision for the future of this relationship and how entrepreneurs across the world can benefit from flagship initiatives such as Make in India.

India-UK India and the UK have always shared a special relationship that goes beyond the numbers and much further than the spoken word. But, belying expectations on both sides, ties seem to have hit the pause button following British Prime Minister Theresa May's recent visit to India. This is causing concern to hundreds of Indian businesses that had, prior to Brexit, invested billions of pounds in the UK in the hope of using it as a bridge to the European Union. What will be the fate of those investments No answers are forthcoming. But as our analysis shows, the India-Britain relationship is too deep and strong and will easily survive such transitory headwinds.

Conclusion Now that Modi has most of his pieces in place to revive the economy, his focus must shift to the creation of jobs. This was primarily why he was elected with such an overwhelming majority and this is the yardstick by which most of the electorate will judge him. But that can happen only when private investment picks up and the private sector begins to add fresh capacities. Analysts believe that is a matter of a few more quarters.