Commendable efforts

Reforms have resulted in a huge inflow of FDI into the country

With the Indian economy growing at a rapid pace and the government also deepening reforms significantly, the future projections for economic growth are quite heartening, says a senior executive of the Federation of Indian Chambers of Commerce and Industry (FICCI).
"Important measures have already been undertaken by the government including introducing the Bankruptcy law and the Goods and Services Tax," Jyoti Vij, Deputy Secretary-General, FICCI, told this correspondent at her Delhi office. "The government is doing a lot to deepen reforms. Many of these measures have been talked about for several decades and having fructified them is a big achievement for the government."
Reforms have also resulted in a huge inflow of foreign direct investment (FDI) into the country, which is very positive for the Indian economy, says Vij. "A lot of public investments are also occurring in several sectors including roads and highways and railways."
She is, however, worried about the asset quality of banks in the country. "The government is not leaving any stone unturned to tackle these issues, but it will take about a year or two to get back on the path of stability," adds Vij.
And of course, private investments continue to be lacklustre, just as they have been slow for the past few years. "We generally see a lag of two to three years for the private sector to bring money, especially after public sector funds are pumped in."
She notes that a lot of over-capacity was created in India from 2002 to 2008 and it takes time to get back to normal.
Asked about the GDP growth rate in India, Vij feels that an optimistic forecast would be between 7.8 per cent and 8 per cent. So what about the 10 per cent projections that are being made by some analysts?
"For India to achieve a growth rate of 10 per cent, a lot more needs to be done," she explains. While the central government is trying to reign in the fiscal deficit, at the state level things are "completely deranged," she says. "A lot of state governments continue to do negative things, which will continue."
The top FICCI official says the government has been very proactive on the GST front. "A major feat has been achieved and the government deserves all the compliments for handling the issue very well," points out Vij. "Even if it is not an optimal GST Act, taking the first step ahead was very critical. The efforts are commendable."
Referring to increased inflows of FDI into the country, Vij points out that global investors are looking at three major markets - India, China and Africa. "Nobody can ignore India and many want to now diversify from China and look at our country."
India has also stepped up its economic diplomatic efforts and the results are turning out to be good. Investors from South Korea and Japan are also seriously looking at investing in India.
Referring to the various initiatives of the NDA government, Vij says after taking up key issues including demonetisation, GST and black money, the government will now have to seriously take up the labour and land issues.
The senior FICCI executive is also pleased with the way things are shaping up on the energy front in India. The country is energy-positive today and costs have become globally competitive. "But all the investments made in the sector need to be sustained."

• India