New Delhi: Cricket fever has gripped India and even the Indian budget is compared to that of a cricket match by Team India under Prime Minister Narendra Modi.
Indian economy watchers to the common man are debating if it was a “sixer” shot by the country’s first woman finance minister Nirmala Sitharaman, or is it Team Modi’s plan to build up the innings steadily to capitalise further by infusing confidence in investors and boost markets to reach its prime objective—making India a $5 trillion economy.
While this buzzes Delhi, India experts in America and the big business forums investing in India are watching the Modi 2.0 budget closely and are positive. They see an opportunity for India to be a rising global economy and many prospects for India-US business, eventually bolstering India’s financial image globally. FDI is a big positive for them, says top India watchers in Washington DC, who also have their tips for PM Modi to fast speed Indian economy.
Nisha Biswal, President of US-India Business Council (USIBC), thinks the Indian Budget is forward-looking and reform-minded. Biswal, who heads the top forum promoting India-US business, trade and investments, told the The Sunday Guardian: “We are pleased to see a 2019-2020 budget that delivers a forward-looking and reform-minded approach for the Modi government’s second term. USIBC welcomes proactive measures to double farmers’ income, liberalise FDI in a number of sectors and allow 100% FDI for insurance intermediaries, and increase FPI investment limits—all reforms USIBC has actively supported.’’
USIBC, coincidentally, last month had done a two-day symposium at the US Chamber of Commerce in Washington DC where many issues linked to India-US business, entrepreneurship and investments were discussed. USIBC sees many positive indicators for India-US trade and investments in Indian budget.
Biswal explained to TSG: “USIBC members will be encouraged by the budget’s focus on skilling Indians, with an emphasis on jobs in the data analytics, artificial intelligence and robotics sectors. Goals like transforming India into a global space and aviation hub also demonstrate the longer term thinking of the new government. We look forward to working with Prime Minister Modi and the Government of India to make these priorities, and the larger vision for a modern India, a reality for people across the country.”
Even a top business platform like US-India Strategic Partnership Forum (USISPF) sees it as a “positive budget with FDI opening new channels of Indo-US partnership and has positioned India as a rising global economy’’.
Mukesh Aghi, president of USISPF, told The Sunday Guardian: “The budget is inclusive. It focuses a lot on social development, housing, water and job creation. It looks at FDI as a source of investment, thereby easing investment in aviation, insurance, media and single retail brand. The budget is focused on long-term growth, hence $10 billion funding into NPA is the public sector banks. In order not to tighten money supply in the domestic market, the budget looks at sovereign Guarantee bonds from the international market. The budget positions India well as a rising global economy.”
Aghi thinks that “US companies’ immediate response has been positive’’, while they get into details. “Opening of aviation, insurance, media, single brand retail is targeted to attract US companies to invest more in India. America is optimistic and enthusiastic about the Budget,’’ he said.
Frank Islam, a top Indo-American community name and an investor and entrepreneur, puts it frankly: “By setting short and medium term goals for the economy, the Finance Minister showed that she means business. Both her goal for this year to make India a $3 trillion economy and the five-year goal of attaining a GDP of $5 trillion are achievable.’’ A philanthropist and someone who runs many social projects in education and livelihood for the poor in India, Islam hails Sitharaman’s proposal to have a new education policy and pledge to reform higher education. “For India to become a global power, a skilled work force is a prerequisite,’’ says Islam, adding, “US businesses will welcome the proposal to liberalise the FDI sectors such as aviation and insurance sectors. A number of reform measures proposed in the budget should also please America Inc. However, what the international business community expects from the government is continued focus on the reform and implementation of the measures spelled out in the budget. It will continue to ensure higher FDI flow into the country, which is necessary for high-digit growth.’’
To some like Richard M. Rossow, Senior Adviser at Center for Strategic & International Studies (CSIS) in Washington DC, the Indian budget appears conservative and “a surprising approach for a triumphant Modi government with real wind at its back’’. He sees the budget with “patience and long-term output”. “The government appears to be doubling down on the drivers of its election victory—delivery of public services to rural communities. But there are seeds for growth; notably continuing the nation’s infrastructure drive.’’
He sees the FDI in media, insurance, airlines, and single brand retail as areas for Americans’ interest. “The government also reduced customs duties for some specialty chemicals, intermediate goods, and parts for electric vehicles. The Finance Minister also announced the plan to increase foreign portfolio investment limits to the sectoral limit, up from 24% in a single investee.’’ Rossow is keeping fingers crossed on if this Budget will break the India-US trade impasse, “though some foreign firms will welcome this budget,’’ he said.
Perhaps Ron Somers, former head of USIBC, has some answers to Rossow’s doubts. Rossow, who has been a keen India watcher, analyst and expert on economy and politics, sees it with caution, but Somers, who now runs India First Group LLC, a strategic advisory firm specialising in guiding investors to India, elaborates PM Modi’s challenges while also answering the means and way outs.
“The headline challenge the Government of India faces is to create a million jobs every month to satisfy the overwhelming demand of job seekers, capitalising on India’s demographic dividend, where more than half the country is under the age of 25.’’
No country has ever created this number of jobs at such a breath-taking rate, says Somers, but he quickly adds: “Yet India must accomplish this feat against the backdrop of a contracting global economy…The Prime Minister’s 2019-2020 Budget boldly lays out a roadmap to meet this challenge.’’
Somers said that the Indian government for the first time is recognising an emerging class of Indian employers—small and medium-sized employers with an annual turnover of less than $58 million, providing impetus to this group by reducing corporate tax rates. A similar tax reduction programme in the United States in 2017 has helped Donald Trump successfully spur economic renewal, bringing U.S. joblessness to historic, low levels.
Like everyone, he too sees a big hope in FDI easing. Yet he wants big cities to host multi-brand retail outlets to create «jobs for youth’’. “Perhaps in the next session of Parliament or when the Prime Minister finally musters control of India’s Upper House, all urban centres of populations greater than one million could be opened to receive and host multi-brand retail establishments. This opening, above all others, will be the watershed that enables the building-out of India’s logistics infrastructure, a step which will spur massive job creation and growth for the remainder of the 21st century.’’
However, he said that bold steps are still needed to attract massive FDI into the country, particularly in the face of global economic contraction, eventually realising the goal of job creation. Somers said: “To make India the investment destination it needs to become, the Government of India would be wise to focus on its great strength of entrepreneurial innovation, creating an ecosystem that celebrates intellectual property protection, allows markets not regulators to set prices, and welcomes investment in a very big way into the soft infrastructure areas of education, skilling, and healthcare.’’
These moves, if executed as said, surely promise to propel India at light speed into the next century!