I hate to paint a gloomy picture but things certainly are not going well for India Inc. Started with Singur’s Nano plant shutdown, lynching a Noida CEO by the labour . Though these are not as catastrophic as what is happening in the US, these are warning signals to put our house in order. All this is punctuated with bomb attacks on key cities without fail.
The business confidence index is reducing as per the new report of NCAER.Following are the few factors, which are pulling down India’s brand value:
- Rising inflation
- Terrorism and lack of safety.
- Political uncertainty and ambiguity
- Strict regulations for Mergers and Acquisitions
- Unfriendly labour laws to conduct business.
- Lack of land regulation and reforms.
Amidst all this how can India show up a brave face and attract more investments and provide jobs for millions of young Indian who are ready to join the workforce?
The answer is not that simple. We need a government that understands that national security along with energy security is of paramount importance. Present government has spent too much time on energy security (nuclear deal) thus neglecting national security. Terrorists are exploding bombs at will. I understand that dealing with terrorism is not an easy task in India, because the enemy is within. But that is not a reason for inaction.
Next are the land reforms, which should denote what land should be granted to SEZ’s for development. This should not come at the expense of farmers. There should be a consensus driven decisions against unilateral decisions. What happened in Singur should drive this policy.
Easing the regulations on Mergers and acquisitions and increasing the FDI limit in key sectors like Insurance should serve as a starting point. The difficulties of Sahara acquisitions and the problems faced by Idea in acquiring Spice telecom should not be repeated.
Companies would like a pool of talented resources to hire. India provides that in plenty. However, Indian labour laws protect the employees from being fired. Though this is good from a employee perspective, it would be difficult for a company to do business in tough times. Striking a balance should ease these laws.
Inflation remained at 12.14% for the second week, which is both good and bad news. The apex bank is no mood to ease the interest rates anytime soon, which would reduce the liquidity and hence the demand. This would bring the inflation down. Looks like it is happening. If the predictions were anything to go by Inflation would come down to 10% by the end of this year – I hope it will. Unlike the Wild West, our RBI has always been cautious which has served us very well.
RBI should be commended for a job well down. China has reduced the interest rates in spite of inflation. Their logic is fuelling growth, which would reduce the inflation. Those are two different approaches taken by two different countries. Only time will tell that India’s measures have worked, but we will never know what happened with China because there is no transparency.
I still hope to believe India is the hottest destination for the investments, but we need to get our state in order. We need better governance.
What do you think can be done differently with the issues mentioned? What do you think India needs right now?