Guestcolumn

If we recall, in the last two years all eminent economists have said that the economy will pick up in the next few months. However, we are still in the grip of a crippling recession. All of us in the industry have become skeptical of any revival.

The only good news is that many strong economies like Japan and even Russia is in deep financial crisis but India has withstood the crisis. It will take a long time for these so-called tiger economies to pick up. Even Latin American economies are showing signs of sluggishness. In this scenario, foreign investors will now look at India seriously within the next six to 12 months as there are no other emerging markets to invest.

If this government becomes stable and if various economic reformsbills like Insurance Bill, Companies Act are passed, investors confidence in the country will certainly shoot up in the near future.

This government is projecting a 7-8 per cent of economic growth, while a 5 per cent growth achieved in the last fiscal. This kind of slow and steady economic growth was not witnessed in any emerging markets. I think foreign investors will look at India for increased investments. But we need more and quick reforms to achieve the economic goal. This is time to compete with other economies and bag more projects.

I, however, do not think, any economic revival is possible in the next six months. Finance Minister Yashwant Sinha’s prediction on revival are too early. We have already reached his September deadline. The revival would be led by the fast moving consumer goods (FMCG) sector and consumer goods sector which would be followed by cement, HCVs, automobile industry and real estate sector.

In this scenario, I think it was unfortunate that this government did not give itsclearance to the Tata Airline project in the right time. I hope the foreign investors are aware about the powerful lobbying against the airline project, thus do not see as a wrong signal for investments. The lobbying against any new project from competition is common all over the world, hence the investors would understand Tata’s plight.

Other thing where the policy makers should apply their mind is the rising inflation. I do not think the inflation is out of hand yet. If we want quick growth then an inflation rate of 6-8 per cent is all right. It was the former finance minister’s Manmohan Singh’s policy to curb money supply in the last two years of Congress rule which led to low inflation and a low growth phase. If the gross domestic product (GDP) goes up by 7 per cent, inflation will certainly touch 8 per cent mark.

On the exports front, infrastructural bottlenecks and South-east Asian crisis are the main reasons for poor performance. At present, we are not working on value addition as far as exportsare concerned. The author is a director at Mahindra & Mahindra and past president of Bombay Chamber of Commerce and Industry.