Congratulations have been pouring in to Narendra Modi and the Bharatiya Janata Party on their victory in the general elections 2014. Some associations, such as the real estate builders association, have used the occasion to ask for urgent reforms to be put in place to save the Indian economy.
The following are some of the groups that welcome Modi and BJP’s new government.
US India Political Action Committee (USINPAC)
“On behalf of the Indian American community and friends of India in the United States, USINPAC extends its warm congratulations to Mr. Narendra Modi for leading the BJP to a spectacular victory in these historic elections in India. We are even more heartened to note that the BJP will have single party majority in the parliament.
With over 800 million voters, a number that is more than the entire population of Europe, and a turnout of 66% which is by far a huge turnout in any democracy, today is indeed a watershed in the history of India and the world.
The people of India today stand poised to unleash their immense potential for the good of the country and global progress towards peace, no poverty, and good health for all. The Indian Diasporas and friends of India in the United States and across the world cheer and send our best of wishes to the people of India, and the leadership of Mr. Narendra Modi.”
TATA STEEL on Modi’s victory –
Tata Steel management on the outcome of the Loksabha Election Results, 2014
Mr. T V Narendran, Managing Director, India and South East Asia, Tata Steel: “We congratulate the winning party and look forward to partnering with the new government. We must work closely together to realize the potential to rally business confidence along the vast opportunities that India has to offer and are confident that the new government will provide a strong and stable new direction for growth in the country. We look forward to clarity on policy going forward and a commitment to strong action that will help the steel and mining industry to play its part with the government in enabling India’s overall all – round growth.”
Mr. Koushik Chatterjee, Group Executive Director (Finance and Corporate), Tata Steel: “We welcome the outcome of the 16th Loksabha Elections and congratulate the winning party. We look forward to working closely with the new government and instilling confidence among the business community for a better economic growth. We are optimist that the new government will drive the country in the right direction of economy, infrastructure, inclusive growth and foreign relations. We are confident that the new government will take the right steps in instilling confidence in steel and mining industry and expedite the infrastructure projects to provide a holistic development of the country. We envisage a stable government and a fruitful journey of economic growth which would place India in a stronger position on the global map.”
Confederation of Real Estate Developer’s Associations of India
CREDAI Chairman Lalit Kumar Jain appealed to the Narendra Modi government to immediately take up the much-needed realty reforms.
“It is a good omen and gives us a ray of hope in the otherwise dark era that has been witnessed during the previous government,” Mr. Jain, who is also the Chairman and Managing Director of Mumbai-Pune developer Kumar Urban development Limited (KUL).
He noted that the NDA’s priority for good governance and growth coupled with checking corruption have been appreciated by the electorate.
Referring to the policy paralysis that rocked the previous government, Mr Jain recalled that CREDAI had submitted detailed proposals to the Prime Minister and other concerned ministers to achieve the much talked about goal of Housing for All, affordable housing and rejuvenating the economy by giving a boost to the real estate sector. The proposals were never even acknowledged, let alone acting on them, he regretted.
The process of approvals for housing projects is very weak across the country, except for the sole exception of Gujarat where developers would get sanction letters by post. Elsewhere, the approvals are delayed giving scope for avoidable corruption, he explained.
Recalling that the Atal Bihari Vajpayee government accelerated growth with a special focus on housing, Mr Jain expressed the confidence that Mr. Narendra Modi will also follow suit.
“We look forward to achieving the objective of mitigating the housing shortage and minimizing corrupt practices,” he said.
For an immediate plan of action, Mr. Jain suggested efficient and accountable governance in building approval process to be initiated at the Centre, to be strictly followed by all States.
He also suggested the realty reforms to cover administrative, banking, tax and legal aspects. It is imperative to go for single window system of approvals, correct the RBI’s perception of housing sector and a balanced land policy that will help the farmers as well as developers.
Automotive Component Manufacturers Association (ACMA)
The apex body for the Indian auto component industry, welcomed the outcome of the national election and wished the new government every success.
Needless to say the auto industry In India has been experiencing one of the most challenging times ever; the industry hopes that the new government would adopt measures to bring the industry back on the growth path.
Commenting on the occasion Mr. Harish Lakshman, President, ACMA said, “The new government is being formed at a juncture when the entire country has been seeking a change. We expect that the new government, when assumes office, will be able to formulate a recovery plan to raise GDP and roll out developmental plans much needed in the country”.
Echoing the sentiments of the auto components industry, ACMA wishes that the new government takes into consideration the following recommendations to foster growth in the automotive sector:
- Bring back footfalls to the auto dealerships: The recent excise rate cut in the interim budget needs to continue for some time, as also interest rates need to be brought down to make vehicle financing attractive for the consumers
Introduce GST as it has been long pending: this single reform has the potential to revolutionise the entire manufacturing sector by eliminating the cascading effect of taxation and can overnight make ‘made in India’ products cost competitive
Infrastructure deficit needs to be addressed immediately: One of the key areas that needs urgent attention is Power deficit in the country. Further, the Government needs to accelerate the building of highways that will not only benefit the automotive Industry and improve connectivity, but also promote the social agenda of inclusive growth
Ensure long-term stable export promotion schemes with a ten-year term or more: It is unfortunate that we are a net importing industry although our potential to service the global exports markets is immense. It is hard for us to place big bets in the global market without knowing whether the existing export promotion measures will stay or be changed. The last Export-Import policy has been beneficial to the auto component industry with several incentives introduces over the five-year period of its validity, these measures need to continue unabated
Focus on labour reforms as it has been a sensitive subject: This unfortunately, no political party has addressed earlier. The labour laws in India are archaic and are not conducive to the growth & development of the industry; as a result the auto industry is constrained to employ significant number of contractual labourers which is neither in the interest of the industry or even the labour. It is not that the industry and the labour unions are loggers-heads on all the issues, there are several areas where there is a concurrence and as a first step we must bring about reforms in these.
CONFEDERATION OF INDIAN INDUSTRY
CII compliments and felicitates the Bharatiya Janata Party on its strong performance in General Elections 2014. “The outcome of the General Elections reaffirms India’s vibrant and dynamic democracy and would greatly help to revive growth and investor sentiments,” stated Mr Ajay Shriram, President, CII, commenting on the results of the electoral process.
CII welcomes the results announced today that clearly expressed the decision of India’s electorate. “CII has worked closely with NDA in its previous term in Government as well as at the state governments. We extend our full support to the new Government and greatly look forward to engaging with its leaders including Shri Narendra Modiji in the next five years,” said Mr Shriram. CII has partnered with the Gujarat state government in the Vibrant Gujarat series of investor summits for several years and has benefited from the guidance and leadership of Shri Modi.
“The economic reforms agenda can be taken forward with a stable political dispensation and a multidimensional tool-box of policy instruments is required to kick-start growth,” noted Mr Shriram. “With prudent macroeconomic management, CII expects that the economy could recover to 6.5% GDP growth rate in 2014-15 as against an estimated 4.9% in 2013-14. Continued reforms could take GDP growth rate to 8% level in three years.”
Mr Chandrajit Banerjee, Director General, CII stated, “With a decisive mandate, the new Government could take the tough decisions that are urgently needed to revive economic growth. The first priority is to get the cleared projects operational. This is the quickest way to revive investment demand. From the point of view of sending a very clear message to the investor community at large, we shall also expect the government to give urgent attention to issues arising out of the land acquisition act and the new companies act. A strong reform package is needed at this stage to generate the 150 million new jobs that India needs over the next ten years. Industry expects a fresh view and innovative new ideas to come up as the new government takes over.”
According to CII, the top priorities ahead of the new Government would be to revive economic growth and create millions of new jobs. CII would engage with the new Government to offer constructive suggestions on major issues of inflation control, fiscal consolidation, revival of industrial growth, and introduction of Goods and Services Tax (GST), said the CII press release. “CII is ready with detailed recommendations for new ministers which it would present when the new Cabinet is constituted,” added Mr Banerjee.
Reforms would require addressing investment revival and improving conditions for doing business across all sectors of agriculture, manufacturing and mining, services and infrastructure. At the same time, it would require strengthening education, skill development, institutional capacity and governance. A key issue to be addressed for job creation with social security is labour law architecture.
CII would partner with policymakers for action on top issues:
- Introduction of GST – CII has suggested a comprehensive GST with a low rate and covering all goods and services that would boost industry.
Fiscal consolidation and containment of subsidies – Industry would expect the Government to adhere to fiscal deficit targets and bring out a roadmap for achieving them.
Containing inflation by addressing supply-side bottlenecks – CII has called for better laws governing marketing of perishables and other agricultural products and greater investment by the private sector in cold chain, storage and marketing infrastructure in PPP mode.
Monetary easing – CII strongly calls for reduction in the repo rate by 100 bps during the current year.
Stable and competitive exchange rate – India needs to guard against volatile short-term flows and protect its currency to promote exports.
Mining – CII expects a strong intervention and co-ordination to resolve multiple issues in the mining sector relating to allocation of natural resources, involvement of private sector and availability of fuel for power sector.
PPP – An institutional mechanism to renegotiate the terms of concession in Public Private Partnership contracts in infrastructure could help resolve stuck funds.
Governance and administrative reforms – CII recommends expansion of e-governance to simplify administrative processes and clearances. These should help to improve and facilitate the environment for doing business, said CII.
Promoting employment – Restructuring labour laws including introduction of Fixed Term Employment for industry to hire manpower on short term assignments would help to create new jobs on a large scale.
Ease of Doing Business: CII is of the opinion that India needs to move up significantly on the ease of doing business index, on which India is ranked 134 out of 189 countries assessed by the World Bank. The time bound target should be to reach top 10.
One of the biggest issues that industry has had to grapple with in the recent past has been retrospective taxation. CII would urge the new government to ensure that no retrospective changes are made to tax policies in the future.
MOODY’S RATING AGENCY
The significant parliamentary majority won by the Bharatiya Janata Party (BJP) led National Democratic Alliance in India (Baa3, stable outlook) is likely to sustain the investor sentiment which has recently boosted equity indices and the rupee, says Moody’s Investors Service. However, Moody’s notes that the impact of today’s election results on the country’s credit profile will only be apparent over the next several months, as economic policy measures are implemented.
While policy measures to revive the economy are likely over the coming months, India’s growth, fiscal, and inflation metrics are unlikely to improve immediately. In the medium term, the extent to which they do will depend on the specific measures adopted by the new government as well as the pace of their implementation.
Expectations that the BJP would win a considerable majority and pursue policies conducive to investment and economic growth contributed to the more than 17% rise in the BSE Sensex in the three months leading up to the announcement of election results. Foreign portfolio inflows appear to have helped drive this increase, as well as the 4% appreciation of the rupee against the US dollar since the beginning of the year. Both equity markets and the value of the rupee rose further as election results were announced on May 16. However, economic trends will take longer to improve than sentiment did.
Economic data published so far this year reveals that industrial output is still weak (it declined by 0.5% on an annual basis in March). Moreover, inflation remains elevated (at 8.6% in April), limiting the scope for monetary stimulus to revive growth. Nonetheless, industrial momentum could pick up in the second half of the year, as stalled investment resumes and consumer confidence increases. We expect GDP growth to continue to be below potential, at about 5% this year, and the possibility of a sub-par harvest due to El Nino effects poses downside risks.
India’s GDP growth rate has been higher than many peer country averages even during the slowdown of the last two years. However, its fiscal metrics, inflation performance and infrastructure are all weaker than those of other Baa-rated countries. India’s relatively high fiscal deficits fuel inflationary pressures and raise private sector borrowing costs. Meanwhile, regulatory restrictions that discourage investment pose supply constraints that curtail growth and underpin recurrent inflationary pressures. In addition, limited financing options and high project implementation risks have inhibited the development of India’s infrastructure. As a result, changes in India’s sovereign credit profile do not hinge upon GDP growth alone. Rather, future assessments of the sovereign credit profile will depend on developments in the following areas: 1) The government’s fiscal position; 2) The regulatory constraints on investment and output; and 3) Growth in social and physical infrastructure.
Pramoud Rao MD, Zicom electronic Security Systems Ltd
For ten long years was feeling jailed. With the fab election results, feeling liberated and positive, from gloom to dhoom, happy days are here again. We hope to live in good governance, Clear business scopes and admirable environment.
Get Set India, we are back in business.