President Obama, Davos and After

Union Finance Minister Arun Jaitley's opined, in an article made public on his Facebook page, about the economic reforms in India's sight and the potential opportunities in the nation's financial future. 

The World Economic Forum’s Meet at Davos was one with a difference. India had the second largest contingent next only to that of the United States. For the past few years serious doubts had been expressed about India and its economic potential. It was placed as a member of the “fragile five”. “I” was in danger of falling off from the BRICS. Both within and outside India there was despondency. This year the environment was entirely different.

After 30 years the Indian electorate had voted a Government with a single party majority. India’s Prime Minister was being described as a strong, decisive and a pro-reform leader.

The four important ordinances relating to land, insurance, coal and mining have demonstrated India’s determination towards reforms. Investors were looking at India with greater enthusiasm. The India focussed meetings were over-attended. Many who wanted to register for these meetings were disappointed at the fact that they could not get entry. Government leaders, policy makers, heads of major corporations were engaging with India. Our own industrialists were attending the conferences with a renewed sense of confidence with their heads held high.

The optimism was, however, tempered with caution. Will India be able to deliver what it has promised? Will all these ordinances translate into law? Will the obstructionists be able to derail India’s march? Many questions centred around this scepticism.

President Barack Obama’s visit to India has helped forge a new commercial relationship with India. The conclave of Indian and American CEOs exhibited a strong confidence about India. The desire of American businesses to invest in India was great. Their queries related essentially to the ease of doing business in India. With the American economy growing stronger, US corporates are flush with funds looking to invest elsewhere. India appears high on their agenda.

Both internal and external factors favour India. The United States is undoubtedly the principal engine of global economic growth. Its growth rate is moving up. Brazil, South Africa and Europe are facing challenges. China has realistically accepted that 7 per cent growth rate is their new normal. The IMF considers this figure as more than normal.

The oil price decline has favoured India as a net buyer. With a reform oriented Government in place, India’s policy to move upwards in near future is rated high. States are competing with each other for higher growth. N. Chandrababu Naidu and Devendra Fadnavis, Chief Ministers of Andhra Pradesh and Maharashtra were aggressively marketing their states for investment in Davos. India needs more resources. Our domestic resources are not adequate. The cost of our capital is high.

The world is looking to invest. There are not too many options which are more attractive than India. Whereas most competing economies are facing serious challenges, India is promising to accelerate its growth. Hope has revisited us. We cannot allow obstructionism or complacency to squander this opportunity. This is a loud and clear message from Davos.