India Inc. Founder & CEO Manoj Ladwa weighs up the ′India Opportunity′ and where the China factor fits in today.
Foreign investors can't help but be charmed by India's people, especially its aspirational and highly educated youth, are comforted that English is the language of business, and are enticed by the growing purchasing power of its domestic market. But almost universally, when it comes to the inevitable China comparisons, India's ramshackle infrastructure lets it down.
When China decides to build a road, build a bridge, or build a port, it gets done. Or at least that has been the impression. That perception is strengthened by its dash from an ′also ran′ to the world's second largest economy in three decades - a feat never achieved before. The Chinese state is like a proverbial Emperor, its wish is a command. In India, on the other hand, people complain about constraints on the acquisition of land, an archaic and horrendously slow legal system, and the so-called “democratic drag” as barriers to growth.
Narendra Modi became Prime Minister two years ago, and promised change that would push India's flagging economy into 8 per cent-plus growth trajectory. India grew 7.6 per cent in 2015-16, the fastest rate clocked by any large economy in the world - not bad at all, especially for an economy that was barely crawling along at under 5 per cent two-three years ago. The macro numbers were also encouraging, with inflation broadly under control, employment rising, and foreign direct investment in the previous 12 months touching $63 billion, making India the world's largest recipient of foreign investment flows ahead of even India's giant northern neighbour. But these numbers should not lead to complacence.
China's GDP, at $10.5 trillion, is five times as large as the $2.2-trillion Indian economy. The gap is huge, but India would argue with some reason that it has begun closing that gap. Two years on, the wheel appears to be gaining momentum. Apart from the headline-grabbing figures mentioned in the previous two paragraphs, the underlying macro numbers, on which all the others figures depend, are also in fine fettle. The current account deficit and the fiscal deficit have been brought back under control and are now in the benign zone.
Modi's quest for delivery from his ministers has been ably supported by India's infrastructure minister Nitin Gadkari, who our guest columnist Ashok Malik describes as “India's Infrastructure Czar”. He straddles a number of key ministries such as Roads, Highways, Surface Transports, Ports and Shipping. We have, therefore, chosen to profile the work of Gadkari in this issue of the ′India Investment Journal′ - for fast tracking various road and other much needed infrastructure projects. Much of this spurt in infrastructure development has, of course, been boosted by public sector spending (the private sector is cash strapped, interest rates still being high). But credit also has to go Gadkari's leadership. His jolly demeanour belies a man with a methodical mind and a reputation for getting work done. He travels the world, strumming statistic after statistic on how Indian infrastructure is a trillion-dollar opportunity.
We agree that the opportunity is huge. We also agree with the World Bank that though much more can and needs to be done, compared to even two years ago, doing business in India is getting easier.
′India Investment Journal′ is an invaluable companion for foreign investors seeking to make sense of this 'India Opportunity'. It seeks to present practical views that people can use in making their minds up about India and how to do business in India. We are delighted that Indian energy minister Piyush Goyal, another of Modi's smart colleagues, stopped over in London and spoke exclusively to us about how he is using social media to bridge the information gap between decisions in New Delhi and implementation on the ground.
And, now that Modi is reaching the business end of his term in office, he will depend critically on Gadkari to deliver the crucial infrastructure that will generate the millions of jobs the people mandated this government to generate.