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Foreign investments in India are set to gain momentum after 2014 general elections, but a ''magic' work is unlikely for the overall economy in the immediate future, says India Ratings' chief Atul Joshi.
Many foreign investments in India are being held back as investors are sitting on the fence for a new government to be formed, but their decisions are unlikely to be dependent on any particular party coming to the power and would be mostly made on the basis of governance stability, he said.
Asked whether economic activities will gain momentum after general elections, India Ratings & Research's Managing Director and CEO, Joshi said in an interview: "It will gain momentum and certainly some investments are being held back".
India Ratings is the Indian unit of global giant Fitch Ratings group.
Joshi said that no large-scale greenfield projects are coming up, because of a demand slowdown as well as the corporates in India being over-leveraged in terms of debt.
Joshi further said that Indian corporates "need to set their house in order".
"The corporates need to release their own leverage. That is a big reason for corporates not setting up new projects. Lets not blame the government alone. The corporates also have a role in that," he added.
With regard to FDI (Foreign Direct Investment), FII and portfolio investments, Joshi said, "Yes, these people have postponed their decisions to come to India.
"Have they decided not to come to India? The answer is, no. They will come to India, but they are waiting, they are sitting on fence and they are waiting for the government to be formed, whether it is A, B or C party, that does not matter.
"All they are waiting for is a new government to be formed. The assurance they want is that a government has been formed and it will continue for the next five years."
Joshi went on to say that "the money is for asking, but it would certainly not result in some magic.
"The GDP growth is not going to reach 8 per cent level immediately or at least for the next two years. No magic is going to happen. The money still is there for asking."
The India Ratings chief said that a modest recovery process is already underway and that is unlikely to stop, unless the new government reverses some reforms.
"Wheels have started turning, so it is unlikely it will stop and we would see GDP growth at something closer to 4.9 per cent this year even if nothing much happens.
"We have already reached the bottom and now from here, the recovery will start. So, what we see next fiscal year is around 5.6 to 5.8 per cent of GDP growth. So, there won't be any drastic change by moving to 6 per cent and above.
"Elections or no elections, that would not have much impact on the GDP number, unless there is a rollback of policies and measures which is a very unlikely event. That would be like government going backwards and I don't think any government would do so," he said.