India Summit – many questions, some revelations!

The Economist is arguably the finest magazine in the world with its outstanding coverage of world events and commentaries on the economy, politics and every aspect of the dynamics of the world we live in. And the India Summit held in Delhi end April not only lived up to the hype but met most expectations of the hundreds of CEOs, academicians and thinkers assembled to understand the state of our nation – India !

The biggest note of confidence was struck at the inauguration itself by none other than Finance Minister P.Chidambaram, whose confidence that the fiscal deficit would be contained to about 4.7 % by the end of the current financial year quickly caught the attention of tweeters and the hordes of electronic media assembled in the room. The current account deficit continues to be a worry though the recent decline in oil and gold prices and the slew of initiatives to boost exports should provide some relief. The FM’s confidence that the GST would receive a thumbs up from the states and there was a seventy percent chance of it being implemented in the current term of the Government and his downplaying the impact of the new land bill and the absence of labour reforms ended the session with the feeling that it was only political grandstanding by the opposition that could come in the way of India’s climb back to six percent plus growth in the current year.

A note of caution was immediately struck by former Chief Economic Advisor to the Government, Shankar Acharya who accused the Government of completely losing control of the macro-economy after 2008 with its increase of subsidies from 1.5 to 2.5 % of GDP and the warning that the political grandstanding combined with poor pace of land and labour reforms would put the economy in a cul de sac! The weak infrastructure with its resultant impact on manufacturing was stressed by FICCI President and HSBC CEO Naina Lal Kidwai while the Chairman of the Economic Advisory Council to the Prime Minister C.Rangarajan put on a brave face and downplayed the impact weak supply side responses could have on inflation once economic growth picked up again.

Two successive industry panels, on Education with Rajendra Pawar of NIIT and Shantanu Prakash of Educomp and Industry with Sunil Munjal of Hero group and Malvinder Singh of Fortis failed deliver any answers to the questions raised by the economists as well as many of us the CEO participants during the day and it was left to Shashi Tharoor in his inimitable style to add a touch of class to the proceedings with his positive comments on India’s role in the world. He did add a word of caution though by stating that youth in 165 out of 625 districts in the country were already frustrated with the lack of job creation and “falling prey to the blandishments of the gun”. A timely warning that economic growth must lead to job creation and enough skills initiatives must proliferate to avoid the disintegration of the demographic dividend into a demographic nightmare for the country!

If there was one complaint one could have about the summit, it was the absence of political leadership from the opposition and the lack of focus on the services industries, but overall the sessions were excellent and it was a day well spent in the national capital! The Indian economy is at a crossroads and while there are signs that the economy has bottomed out and will grow again, albeit slowly, there is much that has to be done to return to the heady years of eight percent growth on a consistent basis!

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