Why CEOs are less jubilant about Modi

There could be no bigger challenge for the Modi government than reviving the manufacturing sector, whose share in the country's gross domestic product has slid to as low a level as 16 per cent.  

All opinion polls should be treated with caution.

The findings should not be interpreted as the final verdict on the issue that is being polled or surveyed.

Yet they should not be completely ignored as they do serve a useful purpose.

They provide a reasonable indication of the broad opinion on the matter that is being polled.

This newspaper conducted an opinion poll among some chief executives of top Indian companies on what they thought of the first six months of the Narendra Modi government and the results are interesting, even after you take into account the caveats mentioned earlier.

One, industry leaders were not as gushing with praise for the government of Mr Modi as would have been expected.

True, about a fifth of the chief executives polled gave Mr Modi 90 per cent marks on his overall performance, but the average score was a little less at around 70 per cent.

This would mean the remaining four-fifths of the respondents gave him a much lower score to bring the average down. Rating the Modi government's economic policies, the chief executives were even less jubilant.

The average score came down to 66 per cent.

And almost 40 per cent of them felt that the Modi government's biggest weakness in the last six months was its slow pace of economic reforms.

If you compare these scores with the general rating industry leaders give to any government initiative or its annual Budget, you will see the relative lack of enthusiasm in the way these chief executives evaluated the first six months of Mr Modi as prime minister.

It is likely that industry leaders are more forthright with their views when they offer them anonymously.

And the poll that was published in this newspaper got those ratings from the CEOs on the condition that their identities would not be disclosed.

But even then a score of 60-70 per cent for a government that came with such high expectations and excitement shows the extent of a downward slide the Modi government has experienced in its popularity. The slide is not steep, but the direction is unmistakable.

One of the reasons for the slide could be the hype that was created around the government's ability to deliver the Indian economy out of all its problems in a jiffy.

Black money was to be repatriated without much delay. Harassment of taxpayers would come to an end. There was this promise of minimum government to provide maximum governance.

Growth was to be revived soon and inflation reined in.

Six months later, there is no clear road map on when and how black money would be brought back into the country.

Apart from some statements of assurance, the government has not yet settled even one of those many controversial tax cases.

The size of the council of ministers of the Modi government is only marginally smaller than the one that its predecessor had.

Growth continues to remain patchy and if the inflation rate has become benign, it is largely because commodity prices have softened and international crude oil prices have fallen by around 30 per cent in the last five months.

No chief executive of a company would give the Modi government much credit for taming inflation. It is, therefore, time for the Modi government to look at the underlying message from such surveys and opinion polls.

Mr Modi would do well to note that not one of the chief executives polled in that survey ranked either the Jan Dhan Yojana or the project to set up 100 smart cities in the country as the best idea promoted by his government.

The precise reasons for their lack of interest in the two schemes are not clear, but it would be safe to assume that these chief executives must have seen through the weaknesses and loopholes in the Jan Dhan Yojana that has already led to the opening of 75 million bank accounts.

But they must have also correctly diagnosed the problem of such a scheme that might lead to financial inclusion on paper, but it may not actually result in improving the people's access and use of the banking network.

Similarly, the smart cities project appears to be a grand idea, but its implementation is fraught with risks and many problems.

India's industry leaders have sensed the chinks in these ideas and Mr Modi's government, too, should not ignore them and get down to the task of addressing the gaps.

Equally important is the poll finding that the chief executives have ranked "Make in India" as Mr Modi's best idea.

There could be no bigger challenge for the Modi government than reviving the manufacturing sector, whose share in the country's gross domestic product has slid to as low a level as 16 per cent.

If the chief executives find that the government's biggest weakness in the last six months has been its slow pace of economic reforms, it is because the government has not taken any major concrete step to revive the manufacturing sector.

Amendment to laws to facilitate labour reforms and land acquisition, along with necessary safeguards to ensure a safety net for retrenched workers and rehabilitation of land losers, would be necessary to realise Mr Modi's big idea of "Make in India".

Chief executives of India's corporate sector have hit the nail on the head. Manufacturing sector revival is a necessity and should be welcomed as an idea.

But with slow pace of economic reforms, the chances of implementing that idea will be remote. Mr Modi should lose no time in responding to the challenges that the poll among chief executives has articulated.