RANDOM ACCESS. Why India Inc is getting impatient

Going by the results of the elections in Jharkand and Jammu and Kashmir, the Modi wave is showing little signs of abating. Voters around the country clearly appear to have decided to give the man — and his vision — a chance to work.

True, the BJP juggernaut stopped short of achieving majority in J&K, or even becoming the largest party in the state. But it did emerge as the single largest party by vote share in J&K, quite a signal achievement for a party which continues to be largely distrusted by the Muslim electorate, and despite its opposition to Article 370, which provides special status to J&K, the removal of which all other local political parties in the state are fiercely against.

It is ironic, therefore, that Prime Minister Narendra Modi’s earliest group of cheerleaders — and by far the most influentially vocal — are showing increasing signs of impatience and even distinct unhappiness with the man.

At a closed-door meeting of the Confederation of Indian Industry earlier this month, captains of industry, bolstered by being away from the media’s glare, were reportedly vocal in expressing their unhappiness with the lack of movement on reforms — or even of signs that the government had a plan in mind and was working towards it. The burden of their refrain was: “We expected things to change. They haven’t.”

This is a marked contrast from the euphoric welcome accorded to the man when he had won a few months earlier. Industrialists — at least in public — are by nature pretty careful of what they say, and seldom, if ever, take the ruling dispensation head on.

Any ‘achievement’ of the party and people in power, be it an electoral win or some policy announcement is always effusively welcomed first, before carefully guarded criticism is selectively leaked later. But in the case of Modi, there was a perceptible difference. This time around, the hosannas had a ring of conviction and personal belief.

What has changed? Why is it that India Inc is veering around to the view that its idol has clay feet? The reason is pretty clear. The economy continues to be in the grip of the worst slow-down in a decade — and there is nothing to show that that will be changing anytime soon.

Which is bad news, because they need something to change dramatically very soon, if the excesses of the past are not to overwhelm them?

For starters, India Inc is under extreme debt stress. According to the mid-year analysis of the economy released by the Finance Ministry earlier this month, with India Inc’s median debt-equity ratio of 70 per cent is the highest in the world.

This means that current earnings are being swallowed up by debt service payments, while there is little capital available to fund future growth.

Couple this with high interest rates — the RBI has resisted all pressures to cut policy rates so far — and a marked slowdown in the global economy, particularly in zones Indian companies had expanded into during the boom years thanks to cheap international credit — and the pressure becomes almost unbearable.

This is where they looked to Modi to provide quick fixes to their biggest problems. Corporate India’s biggest worries centre around four issues — taxes, land, labour and credit costs. They expected that the ‘business friendly’ Modi would get cracking on tax reforms, use his Parliamentary majority to push through long-pending reforms on labour laws, discard the hated Land Acquisition Act and replace it with a more pro-business version, and kickstart economic activity by cutting lending rates.

There were a couple of subsidiary, but equally important expectations. They expected Modi to live up to his image of being a quick decision-maker, and thus break the ‘policy paralysis’ which had brought the government’s decision-making to a near stand-still during the last years of the previous government.

There was also the hope that various investment plans — both public and private — which had been stalled for one reason or the other, would get going. This was an important action point. With estimates of stalled projects running to Rs 18 lakh crore, any real movement on unblocking these would have sent business confidence and expectation indices soaring.

In the event, nothing much has happened on all these points, although the government did manage to get a modified version of the GST Bill into Parliament just before its Winter Session wound up. There are good reasons why there hasn’t been much action on all these fronts, but industrialists tend not see the difficulties of running a fractious democracy managed by a creaky and inefficient administrative infrastructure.

Being masters of their own domains, they expected a man who projected himself more in the CEO mould than as a politician, to be able to push through things quickly.

And of course, they expected the ‘pro business’ PM to focus solely on matters that affected them. But to their chagrin, Modi has been pursuing his own agenda, focusing more on bottoms-up initiatives like the Jan Dhan Yojana for financial inclusion and the ‘Swachh Bharat’ cleanliness campaign.

These, as one commentator noted, may be “building the narrative” for broader reform by convincing the masses that reforms will also impact their lives, but corporates are impatient to see action on their behalf.

Writing in these columns a day before the CII meeting, industrialist Harsh Pati Singhania counselled his colleagues to wait a while longer (Some patience, please, for achhe din, December 9).

As he pointed out, Modi himself never specified a timeframe for ‘achhe din’ (good days) to happen. But for many in corporate India, those days should have already started. Dealing with that impatience is going to be Modi’s biggest challenge as 2015 rolls around.

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