As Prime Minister Narendra Modi met industry captains, economists and bankers on Tuesday morning to discuss the recent global events and find opportunities for India in them, markets saw a sharp rebound, with benchmark BSE Sensex closing up 424 point.
The acknowledgement of global concerns which are impacting India calmed the BSE Sensex, which had closed below the 25,000-mark for the first time in 15 months, losing 308 points on Monday.
Today’s interaction was the second such exercise by the Prime Minister with an aim to hear out industry’s concerns on issues ranging from high cost of capital and labour to monetary policy easing at a time when slowdown in China’s manufacturing has caused ripples across the globe, and India’s economic growth slowed at a faster-than-expected pace to 7 per cent in the first quarter of the current fiscal. While, exports contracted for the eighth straight month, shrinking 10.30 per cent in July on back of a weak global demand.
Though India Inc termed the interaction “productive with substantive outcome”, they are clear that reviving demand and improving ease of doing business in the country are imperative to counter the slowdown. In fact, several participants urged the government to focus on sectors including agriculture, irrigation and rural infrastructure to target rural demand, which will have a spill over effect on other sectors as well.
The interaction also brought to the fore the fact that while industry has accepted “uncertainty and volatility” as the new normal, the government is confident of tiding over the situation given the strong fundamentals of the economy.
The key contributors to the turmoil – anticipation of US Federal Reserve policy, geo-political events like the US-Iran nuclear deal, shale gas production in the US and China’s slowdown – which were discussed during the meeting, are though a cause of concern, the situation also offers an opportunity in terms of cheap oil and falling commodity prices, which will help in strengthening the macro-economic indicators of the country. The government is hopeful that it will also help in cutting down the cost of building infrastructure due to falling commodities’ prices.
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