The Indian economy is at a turning point was the consensus view of the panelists at the India Economic Summit being organised by the World Economic Forum and the Confederation of Indian Industry in New Delhi. Positive sentiment among investors is now clearly visible though more needs to be done to maintain a strong growth momentum.
Ajay Shriram, president, CII and Chairman and Senior Managing Director, DCM Shriram Ltd., said that improving the ease of doing business in India was a major issue and the government has taken up this challenge seriously. He observed that several reforms could be undertaken by simply studying the best practices of the various states in India. He stated that the action had shifted to the states and the states were now vying with each other to attract investments. Shriram was of the view that one of the ways to&nb sp;fuel growth was to clear the backlog of mega-projects that were held up for various reasons.
According to Anand Mahindra, Co-chair, India Economic Summit and Chairman and Managing Director, Mahindra and Mahindra Ltd, it will take some time to feel the real impact of the reforms being undertaken. He was of the view that the government needed to make steady consistent reforms rather than big bang ones.
In his view the macroeconomic conditions in the country were now conducive for the Reserve Bank of India to consider reducing interest rates. He pointed out that core inflation had come down, oil prices were down and a stable government was in place at the centre – creating ideal conditions to reduce interest rates. This, he felt, would help fuel demand in the economy and spur growth. In his view, the GST needs to be implemented to help create a common market in the country.
Dr. Gita Gopinath, Professor of Economics, Harvard University stated that while the measures being taken by the government are indeed encouraging, there is still need for some caution. She was of the view that the economy needed to exhibit two to three quarters of consistent growth before one could be more confident that the recovery has taken hold.
Dr. Gopinath cautioned against external factors outside the control of the government which could affect India’s growth prospects. These include adverse changes in the weather which would impact agricultural production or a worsening of the current account deficit among others. Dr. Gopinath observed that global investor interest in India would only remain so long as the government continued to make steady progress with its reforms programme. Some of the major issues, in her view, that the government still needed to address included lab our reforms and land acquisition.