That’s the $125-billion question on India Inc’s mind as the BJP-led NDA gets ready to take office. With roughly R7.5 lakh crore of projects stalled because companies are not able to acquire land, sort out fuel linkages, get an environment clearance or tie up the funds, corporate India has been desperate for a decisive government, one that will act quickly to help revive growth.
No one believes the economy is returning to an 8% or 9% growth trajectory in the next couple of years, but they’re hoping the new government will work towards it. Bharat Forge chairman Baba Kalyani put it plainly enough when he said on Friday: “We expect the government to put the stalled projects on a fast-track mode, push for better investments and focus on the anufacturing sector.”
Industry understands it’s not going to be an easy ride even if the BJP has a clear majority in the 543-seat house. As Sunil Kant Munjal, joint MD at Hero MotoCorp, points out, the government needs to take tough decisions on the goods and services tax and foreign direct investment. “Modi should review his party’s opposition to FDI in multi-brand retail. It is easy to put in caveats to protect small traders, if that’s the concern,” Munjal said.
However, there’s confidence and belief the government will get to work fast. For instance, Pawan Goenka, CEO, Mahindra & Mahindra, expects GST to be implemented very soon.
That the NDA, between 1999 and 2004, played a key role in initiating the nation’s infrastructure build-up is what convinces corporates that Narendra Modi’s government can deliver. The BJP manifesto promises it will quickly complete the freight corridors and industrial corridors, spruce up airports and build new ones, roll out a high-speed train network, develop waterways and construct 100 new cities, all of which is comforting. The problem is whether the government and private players will be able to find the resources — estimated at $1 trillion — to fund the projects given corporates remain highly leveraged and banks inadequately capitalised.
Which is why the BJP government’s handling of foreign investors will be critical. As Adi Godrej, chairman, Godrej Group, put it, the government needs to improve the ease of doing business in India, “which was never very good but deteriorated in the last three years”. Multinational corporations such as Vodafone, Nokia and Shell have been at the receiving end of the UPA government in tax matters — transfer