The Narendra Modi government, that completes two years in office on 26 May, has indeed exhibited deft economic management of the country, a reason why investors calls India an “oasis of hope” in the sluggish global growth environment. Its results are quite visible. FDI inflows coupled with the revival of India’s mutual fund industry in the past two years indicate a strong belief in Prime Minister Narendra Modi’s leadership that makes “India as one of the fastest growing large emerging markets by 2020 growing at an average pace of 7.6% per year,” projects a recent study by IHS Global Insight “outpacing China for the first time in over three decades.” Such positivity is triggered by the government’s commitment to fiscal discipline, reined in Current Account Deficit (CAD), moderating inflation and the resultant hope of more conducive interest rates. However, it is also a fact that the common man, who has huge expectations from this government, is losing patience to feel the impact of Modi’s policies in their lives. “Despite this feeling, it must also be acknowledged that generating over 7% growth in the depressed global environment is no small achievement,” says Raghvendra Nath, MD at Ladderup Wealth Management group. There is near unanimity that PM Modi has been using hard earned political capital to bring about structural changes which would have wide ramifications in terms of propelling growth and creating jobs; two of its main electoral promises. The Goods and Services Tax Bill, which is waiting in the wings, is another structural change that would boost jobs creation by incentivising the manufacturing boom as envisaged by the “Make in India” vision. Arranging investment to fund India’s growth is being made possible largely due to the Prime Minister’s good marketing of “Brand India”. Power Minister, Piyush Goyal wishes to supply much cheaper (coal-fired) electricity to industries to power India’s manufacturing revolution. On the domestic front, the revived sentiment of the domestic investor is palpable. “The fact that retail investors are coming back to equity markets validates their belief in the government’s economic vision,” says Nath. In FY16, India’s mutual fund industry has raised about Rs 60,000 crore in equities (about $10 billion). The mammoth exercise done under the government’s financial inclusion programme (Jan-Dhan Yojana) has resulted in opening up of over 28 crore new bank accounts topped up by over Rs 36,000 crore indeposits. About one crore people have given up LPG subsidy largely due to the PM’s persuasion.
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