What Ratan Tata tells Modi: Mere promises alone won’t work wonders

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Old 12-Feb-2016
What Ratan Tata tells Modi: Mere promises alone won’t work wonders

There is growing chorus among Indian industrialists that the Narendra Modi government is not doing enough work on the ground, resulting in a bigger-than-expected delay in reviving the investment cycle. They note that foreigners are still hesitant to cross the border and invest in India, as data shows, despite the promises made by India’s pro-business Prime Minister Narendra Modi on ease of doing business and India’s prospects as the sole bright spot among emerging markets.

Modi’s promises alone wouldn’t work to bring in investments and, for investments to happen, companies should find a conducive environment to invest in India when they finally arrive buying those promises, cautioned industrialist Ratan Tata in Bangalore on 4 February in a media-interaction. “So the real test comes when they (foreign industries/ investors) are making their due diligence to decide whether India is the place to invest, not just on the basis of Mr Modi's promise,” Tata said.

The investment data compiled by agencies such as the Centre for Monitoring Indian Economy (CMIE) has not been very promising so far. According to a recent CMIE report, announcement of proposals to create new capacities declined sharply (74 percent) in the third quarter of fiscal year 2016. Only 383 projects were announced in the quarter with an estimated investment of Rs 1 lakh crore, which is the lowest in at least five quarters, CMIE said. But, to be, sure, it is too early to conclude a trend yet.
“It is difficult to figure out what the exact reasons for the slowdown are because what we essentially do is to look at what the numbers aggregate. The decline seems to be quite secular across all sectors. So, one sees a decline in manufacturing, a very sharp fall in mining, construction, so it is quite secular. So, it looks like there are some macro reasons, there are some larger reasons that seem to be holding back investments,” Mahesh Vyas, Managing Director & CEO of CMIE told CNBC-TV18 in a recent interview.
Why investments are falling or, to put the question in another way, why Modi’s campaigns executed very well during his many foreign trips (Remember Madison, Wembely and Guildhall), which were no less effective than fund raising-campaigns by professional investment bankers, aren’t working yet?

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