India Inc frets over Modi govt’s fading sheen

Discussion in 'Economy & Infrastructure' started by vikas_g, Apr 9, 2015.

  1. vikas_g

    vikas_g Regular Member

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    MUMBAI: India Inc's confidence in the Modi government, about to complete a year later next month, seems to be dipping. Two tweets from the chairman of Rs 4,600-crore Marico, Harsh Mariwala, on Tuesday are perhaps telling. "Sheen is falling of Modi govt in the context of promises, and gradual delivery. Need to move fast, hope interest rates are reduced today," said the first tweet. The next said, "Heard from a leading politician that if elections were held today NDA will barely win 200 seats in spite of weak opposition."

    Mariwala is not the only industrialist who is disappointed with the Modi government - the very lot that was its biggest cheerleaders. It's said that the conversation in board rooms is changing. The pace of clearance is no longer the only issue bothering India Inc. Captains of industry are now highlighting two new concerns, albeit in hushed tones - some of the recent notices from the taxmen and the seemingly unchecked Hindutva agenda of certain right wing groups.

    While most CEOs still keep their faith with the Modi government, they are also taking note of the attacks on churches as well as the fresh spurt of tax notices. They feel this is sending out a wrong signal to investors at a time when the government is chasing funds, growth and development.

    TOI reached out to several industrialists, CEOs and bankers, most of whom were reluctant to speak on record because of the obvious sensitivity attached to the subject. Some of them had earlier complained about things not happening on the ground despite improved sentiments. Now many said social disharmony was not conducive to business.


    RPG Group chairman Harsh Goenka said that tax demands of such high value would invariably result in increased litigations. "As long as the issues are treated objectively and fairly, it should not worry India Inc. However, as a secular nation, we must avoid any form of fundamentalist activity. Random fascist comments lead to communal disharmony and should be dealt with severely," Goenka told TOI.

    A top banker, who did not wish to be identified, also appeared worried over fringe or extreme right wing groups chasing the Hindutva agenda and wondered why Modi hadn't clamped down on them yet. A few months back, FICCI president Jyotsna Suri had told TOI, "It (statements by the saffron hotheads) is certainly diluting the focus and is uncalled for."

    While agreeing that there has been good progress in the government's approach to improving ease of doing business in India, a CEO of a multinational company, which recently faced a tax notice, said such issues impacted the daily operations of a company. The official, who did not wish to be identified, indicated the matter would end up in court. "In some situations, I understand that while solutions are attainable, neither ministers nor bureaucrats want to be the first to take difficult decisions due to the fear of being questioned later." He suggested a mechanism of joint decision-making with transparent documentation of facts and reasons so that the diffidence in making such decisions is reduced.

    Not all CEO's are complaining though. Venugopal Dhoot, chairman Videocon Industries, whose brother Raj Kumar Dhoot, is a Rajya Sabha member from Shiv Sena, believes that the government is following secular ideals. "Tax demands have nothing to do with the government. Tax laws have been passed in Parliament and accordingly demands are being raised," Dhoot said.

    Piruz Khambatta, chairman Rasna agreed with Dhoot. "Tax demands are a legal issue and the government has nothing to do with it." Khambatta, who is from Narendra Modi's home state of Gujarat went a step further to say that the voices against Hindutva groups was an "over reaction". "Conversion is not good. Our stated position from the point of view of the Parsi community (he is a Parsi) is that we are against conversion," he said.

    Similarly, a majority of CEOs also agreed that much has happened in the last few months and the Modi government was suffering from the burden of over expectation. Most felt the Modi government should also be congratulated for bringing focus back on growth, curbing widespread corruption, strengthening overseas trade and successfully auctioning scarce resources like spectrum (telecom) and coal fetching the exchequer over Rs 3 lakh crore since taking office.


    India Inc frets over govt’s fading sheen - The Times of India
     
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  3. DingDong

    DingDong Senior Member Senior Member

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    India INC has it's own selfish motives and expectations. Let them whine. Tax/Corporate laws are complex subjects and any hasty decision will not serve us better in long run. India INC wants the government to adopt the ones drafted by the CEOs and MDs which the government won't do.
     
  4. Compersion

    Compersion Senior Member Senior Member

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    The question is also about global economic situation ...
     
  5. pmaitra

    pmaitra Moderator Moderator

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    Even the land acquisition laws, which in the early days of the republic, were inadequate, and poor illiterate farmers could be easily duped into bonding off their land after signing agreement which they were not able to read or understand. The changes made in land acquisition laws have indeed served a good purpose. I hope the Modi government will keep this in mind and not bow to the corporate interests and change those laws. When we have a government with no opposition (remember that 10% rule?), this can lead to a very efficient and quick improvement of the country, or a steady abuse of power and a rapid decline, leading to complete ouster in the following polls.

    Also, when will the Income Tax Department actually start paying back overpaid taxes, legitimately due to the tax payer? This is one of the most corrupt organizations that India has, and there is no one to haul it up.
     
  6. sob

    sob Moderator Moderator

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    @pmaitra, regarding paying back taxes, things have changed a lot. Under PC, IT dept. has got a big overhaul, IT system is in place. Now filing of returns is online and getting refund from IT is also simplified. In my case in last three years, myself and my company have got back refunds without any followup. It gets credited to the bank directly.
     
    Last edited by a moderator: May 10, 2015
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  7. pmaitra

    pmaitra Moderator Moderator

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    That is good to hear. Electronic filing of taxes is a good approach. Thank you for the information. I am glad now refunds are being issued.
     
    Last edited by a moderator: May 11, 2015
  8. sob

    sob Moderator Moderator

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    This is opinion of some industrialists, while others have different opinion.

    If this was the overall sentiment why did Moody's upgrade India's rating. IMF is calling Indian economy one bright spot in gloomy global scenario.
     
    Mad Indian likes this.
  9. ezsasa

    ezsasa Senior Member Senior Member

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    Mariwala, deepak Parekh, Majumdar of biocon are part of the same gang. No need to take them seriously. Most of the negative comments always come from thres three. This Mariwala was criticising AJ's budget speech 20 minutes into it, which means Mariwala had already made up his mind.

    When they say modi govt lost its sheen may be they mean they are no longer getting special preferences like they are used to getting before
     
  10. sob

    sob Moderator Moderator

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    It is same like every year we wait for cuts in personal tax rates/ increase in exemption limits. If it does not happen then the budget is a failure. Beyond that we do not look at anything else.
     
  11. Vishwarupa

    Vishwarupa Senior Member Senior Member

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    Does communal harmony really worry India INC?

    Is India INC so dumb that they are not able to make out the difference between what is genuine Press & presstitutes? If educated people do not make out the difference what will common Man think about fake Church attacks?

    Or is this one of those Presstitute articles!!
     
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  12. NSG_Blackcats

    NSG_Blackcats Member of The Month OCTOBER 2009 Senior Member

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  13. sorcerer

    sorcerer Senior Member Senior Member

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    Asia’s Growth Gap: India Versus The Rest
    \
    India has emerged as Asia’s leading light as China’s slowdown continues and other developing economies struggle to pick up speed, according to the latest economic indicators.

    On Wednesday, China released data showing the world’s second-biggest economy expanded at its weakest pace since 2009 in the March quarter,
    slowing to an annualized gross domestic product (GDP) growth rate of 7 percent on lower investment growth and a weak property sector.

    While in line with Beijing’s official target and the median estimate of economists surveyed by Bloomberg, industrial production slowed to its lowest level since 2008 and fixed asset investment hit a record low, causing Asian stocks and market interest rates to fall.

    For the quarter, China’s economy grew by 1.3 percent, down from 1.5 percent growth in the previous quarter, with analysts urging further monetary easing to counter deflationary pressures.

    “Economic momentum down-shifted more significantly in March,” Andrew Polk, a Beijing-based economist at the Conference Board research group, told Bloomberg News. “The implications are for further sluggishness in the second quarter, without a more forceful policy response.”

    While ANZ Research noted some “initial signs of recovery” following recent moves by Beijing to stimulate investment, it maintained its forecast of 6.8 percent GDP growth in 2015 since “the authorities are unlikely to engage [in] aggressive policy easing and policy actions will remain data dependent.”

    “The changing economic incentives among local government officials on top of an anti-corruption campaign suggests that many local governments may choose to do less than more, which will further slow the implementation of infrastructure investment and reforms,” the Australian bank’s economists warned.

    On Tuesday, the International Monetary Fund (IMF) maintained its January forecasts for Chinese GDP growth of 6.8 percent this year and 6.3 percent in 2016, stating in its latest “World Economic Outlook” that Beijing’s emphasis on reducing vulnerabilities from recent rapid credit and investment growth would likely cause a further investment slowdown, especially in real estate.

    With property investment accounting for up to a fifth of China’s total fixed asset investment, the weak property sector has significantly weighed on the previously booming economy. According to the Australian Financial Review, around 6.5 million newly completed residential apartments lie vacant amid an “acute oversupply of property across the country.”

    India, Japan Upgraded

    The IMF cut its growth forecasts for most emerging and developing economies, down from 4.6 percent last year to 4.3 percent in 2015, amid lower commodity prices and the regional effects of China’s slowdown. Emerging and developing Asia is expected to slow from 6.8 percent growth in 2014 to 6.6 percent this year and 6.4 percent in 2016, with the region as a whole expected to post 5.6 percent and 5.5 percent growth in 2015 and 2016, respectively.

    However, it reaffirmed that India would overtake China as the fastest growing major economy in 2015, expanding by a predicted 7.5 percent both this year and next, up 1.2 percentage point and 1 percent from its January WEO update, respectively.

    “[India’s] growth will benefit from recent policy reforms, a consequent pickup in investment, and lower oil prices…[which] will raise real disposable incomes, particularly among poorer households, and help drive down inflation,” the Washington-based organization said.

    Indonesia, Malaysia, the Philippines, Thailand and Vietnam are expected to post growth of 5.2 percent this year and 5.3 percent in 2016, unchanged from the IMF’s previous forecasts and up slightly from the 4.6 percent growth achieved in 2014. However, the brighter forecast masks expected divergence among the ASEAN members, with Malaysia seen slowing markedly this year while the Philippines and Thailand pick up speed and Indonesia remains steady.

    While the IMF noted Japan’s disappointing performance in 2014 following its consumption tax hike, it revised upwards its forecasts for the world’s third-biggest economy to 1 percent growth this year and 1.2 percent in 2016, up 0.4 percentage point on its January forecasts.

    “The gradual pickup reflects support from the weaker yen, higher real wages, and higher equity prices due to the Bank of Japan’s additional quantitative and qualitative easing, as well as lower oil and commodity prices,” it said.

    Improved conditions in Japan reflect a general rebound in advanced economies, which are forecast to increase from 1.8 percent GDP growth in 2014 to 2.4 percent in 2015, supported by cheaper oil. However, the IMF cut its forecasts for the U.S. economy to 3.1 percent growth this year and next, down 0.5 percentage point and 0.2 percentage point, respectively.

    While the IMF said the Asia-Pacific region would “continue outperforming the rest of the world over the medium term,” it noted the risk of “elevated household and corporate debt amid higher real interest rates and a strong U.S. dollar.” Although lower oil prices will deliver a windfall gain of 1.7 percent to regional GDP in 2015, commodity exporters including Australia, Indonesia and Malaysia will see a fall in foreign earnings that is set to batter government coffers.

    The fund said South Korea’s growth momentum had stalled, with its forecast 3.3 percent growth in 2015 dependent on supportive monetary policy and improved terms of trade. Despite the end of the mining boom, Australia is predicted to see a slight improvement to 2.8 percent growth in 2015 and 3.2 percent in 2016, aided by lower interest rates and a weaker currency.

    Risks for Asia include further weakness in the region’s two heavyweights, China and Japan, along with persistent U.S. dollar strength and higher debt-servicing costs. Australia, Japan, South Korea and Thailand have been identified as growing slower than their potential speed, requiring policy action to combat declining inflation expectations.

    Overall, the IMF said the global economy would expand by 3.5 percent this year and 3.8 percent in 2016, although it warned of challenges including lower potential growth resulting from the global financial crisis, and the effects of movements in oil prices and currencies that were creating “winners and losers.”

    “A further sharp dollar appreciation could trigger financial tensions elsewhere, particularly in emerging markets,” it said, noting the potential for surprises from “disruptive asset price shifts.” Events in Ukraine, the Middle East and West Africa “could generate regional and global spillovers,” while stagnation and low inflation in advanced economies could further hamper the recovery, it said.

    Adding to the softer picture for emerging Asia, on Monday the World Bank said East Asia’s developing economies would slow to 6.7 percent growth in 2015 and 2016, down from 6.9 percent in 2014. It said in its “East Asia and Pacific Economic Update” that China would moderate to 7 percent growth in the next two years, with Beijing facing a “delicate balancing act” of reforming the economy and cutting local government debt while preventing a sharp slowdown.

    Excluding China, the region is expected to see growth improve by 0.5 percentage point in 2015 and 0.3 point next year, helped by stronger ASEAN economies, with the exception of Malaysia.

    Yet despite the gloomier outlook, the Washington-based financial institution said Asia would still remain the center of global economic activity.

    “Despite slightly slower growth in East Asia, the region will still account for one-third of global growth, twice the combined contribution of all other developing regions,” said Axel van Trotsenburg, World Bank East Asia and Pacific Regional Vice President.

    “Lower oil prices will boost domestic demand in most countries in the region and provide policymakers a unique opportunity to push fiscal reforms that will raise revenues and reorient public spending toward infrastructure and other productive uses. These reforms can improve East Asia’s competitiveness and help the region retain its status as the world’s economic growth engine.”

    In the meantime though, Asia will be hoping India continues its newfound mission as the regional growth leader, while China and Japan grapple with much-needed reforms.
    Asia’s Growth Gap: India Versus The Rest | The Diplomat
     

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