Perhaps the defining statement that Union finance minister Arun Jaitley made at the World Economic Forum meet at Davos is that foreign investors are waiting to be sure about the credibility of the decision making process and the stability of policies of the Modi government. He was confident that India was “close to the point” from where investment will pick up as there are a large number of investors waiting to come in.
One does not know how much longer foreign and domestic investors are going to wait or how much more globe-trotting will have to be done by Prime Minister Modi and his ministers before investments come. Just as crowds at election meetings don’t necessarily translate into votes, the enthusiastic non-resident Indians that gather in hordes and foreign businessmen don’t easily put their money down until they are sure of the returns. The government has surely realised this.
These ministers should call a moratorium on globe-trotting. They would find it more productive to stay at home and get down to implementing measures that would create a friendly eco-system and make it easier to do business in the country.
Mr Jaitley mentioned, for the nth time, that his government would have stable tax policies, no retrospective taxation, and that he was not in favour of raising tax rates. Other attractive offerings that Mr Jaitley mentioned included incentives to boost manufacturing, particularly for small and medium enterprises which were already provided for in his first Budget, dealing with subsidies initially by plugging the huge leakage of funds and selling off sick public sector units. The one thing that the global CEOs who met Mr Jaitley were reportedly impressed with was the government’s ordinances for raising the foreign direct investment cap in the insurance sector to 49 per cent from 26 per cent, the coal bill and the mines bill, among others.
It underlined the government’s seriousness on reforms. Mr Jaitley also took the extraordinary step of dwelling at length on the need for the Modi government to take strong steps to curb the religious fanatic fringe that threatens to derail the government’s development agenda. This was necessary as there is a genuine fear amongst foreign and domestic investors that the extremist religious elements in the Sangh Parivar will prevent Mr Modi from fulfilling his development agenda and that Mr Modi is not coming out strongly enough to shut them up.
One hopes that once Mr Jaitley and his entourage are back on Indian terra firma, they will get down to meeting commoners and small entrepreneurs and hear what needs to be done to get the economy going.
