Make Economy Bulletproof from Global Jitters, Say Tycoons to PM Modi

PM Modi chaired a high-level meeting on global economic scenario

Here’s a 10-point cheat-sheet:

1) At the gathering, industry chamber ASSOCHAM told PM Modi that policy makers needed to act fast to “bullet proof” India from global jitters. It called for a deep cut in interest rates and new duties to stop dumping of Chinese products such as steel.

2) The meeting was attended by tycoons like India’s richest man Mukesh Ambani of Reliance Industries, Sunil Mittal of Bharti Enterprises and Kumar Mangalam Birla of Aditya Birla Group, among others. Leading bankers like Arundhati Bhattacharya of State Bank of India and Chanda Kochhar of ICICI Bank were also present.

3) Also at the meeting were Finance Minister Arun Jaitley, Reserve Bank of India governor Raghuram Rajan, Chief Economic Advisor Arvind Subramanian and other leading economists.

4) The agenda was ‘Recent Global Events – Opportunities for India’ – turn China’s pain into India’s gain. The International Monetary Fund considers India’s economy a rare bright spot among emerging markets and PM Modi sees a chance to attract more foreign investment as money flows out of China. PM Modi asked India Inc to take risks and make investments, said Sumit Mazumdar, president of industry body Confederation of Indian Industry (CII), after the meeting. The government agreed that more needs to be done to improve the ease of doing business in the country, Mr Mazumdar added. (Watch Video)

5) India’s macroeconomic situation has improved considerably since the “taper tantrum” of 2013, not least thanks to lower prices for the commodities it imports. Inflation, which was at double digits, has halved since.

6) But Investors and corporates increasingly worry that PM Modi has not moved fast enough on reforms since taking office. Annual growth slowed to 7 percent in the June quarter.

7) After farmer protests forced the government to drop a major land reform and opposition parties delayed the growth-boosting Goods and Services Tax (GST), expectations are growing that PM Modi will soon unveil new measures to make it easier for foreign money to enter India. The land bill was not discussed, but Finance Minister Arun Jaitley expressed hope that GST bill will be passed, Mr Mazumdar of CII said. But no fiscal incentives were discussed to boost demand in economy, he added.

8) The government predicts India’s economy will grow at 8 per cent or more in 2015/16, prodded by government spending. Yet private investment has been slow to pick up, with banks and businesses hobbled by bad debts and high lending rates.

9) In the real economy, there are few signs of a major economic recovery. In the construction and diamond polishing industries, for example, there have been large layoffs.

10) This was the PM’s second meeting with India Inc in two months. It was held also as the US is seen as preparing to raise interest rates for the first time in nearly a decade, which could trigger capital outflows from emerging markets like India.