PM Modi chairing a review meeting for various infrastructure sectors
With a
crushing defeat in hand from bitterly fought Bihar elections , Prime Minister
Narendra Modi would be in UK for three days beginning November 12. His
pre-planned programme includes some flashy events that so far had gone pretty
well in all his foreign tours. But this time around, he would be on a foreign
soil when his popularity at home has taken a beating, if not plunge.
The good
thing is that the setback to the Prime
Minister’s BJP has come about when his government at the Centre has three and
half years more to go. So, even though he has lost some early wickets , he has
enough time to build his innings and win the match. He has to either win or
lose, there are no draws in political innings.
But the trouble is that the wicket is not playing
easy. He has dearth of talent in his Council of Ministers , which he is
expected to shuffle sooner than later, and his opponents have tasted the blood
and would go for a kill to ensure that Modi becomes a lame duck PM.
Well, Modi can be anything but a lame duck. He has
survived such adversities as Gujarat Chief Minister. Then, what is that one can
expect from him in the coming weeks:
As he has done it just on the eve of his departure
for UK, as many as 15 sectors including defence, civil aviation, manufacturing,
e-commerce, construction and broadcasting have been liberalised for foreign
investors. Caps have been relaxed and more automatic windows have been opened
for the entry.
The PM Modi is also reviewing progress of rather tardy
implementation of the infrastructure projects, which are now considered key to reviving
the economic growth. Even as the government gets some consolation that India
has been acknowledged as the bright spot by the likes of the IMF and the World
Bank and it has upgraded its ranking in the ease of doing business, a host of
sectors remain in stress.
Importantly, these sectors include the crucial
agriculture which is a source of employment for over half the Indian population
of 1.3 billion. The rural demand is subdued
while the industries like telecom, real estate, steel, power, roads,
construction are in heavy debt with promoters finding it difficult to service
the loan. To expect the private sectors to revive growth and investment in
these sectors would be naive. Either the government brings in resources or
funds come from abroad. These are the only alternatives which Modi and his FM
Arun Jaitley know it too well.
The trouble is the government has resource
constraints while the foreign investment is drying, especially in the capital
market through the foreign institutional investors. As per the latest RBI data,
India attracted total foreign investment of USD 73.56 billion in 2014-15,
riding on the Modi wave. Of this , USD 40.93 billion were in the form of
portfolio investment while the rest were FDI.
The situation is just the reverse this year. In the first half of the
fiscal year (April-September), India’s total foreign investment is just about
USD 8.29 billion resulting from negative USD 8.78 billion in the capital market and positive FDI of USD
17.07 billion.
In the
comparable half year (fiscal) in 2014-15, the FDI was USD 15.79 billion and
portfolio USD 22.20 billion. So, a huge
fall in portfolio has to be made up. That is what is required also to bring
about a current account and the consequent foreign exchange stability, which cannot depend only on falling
crude oil.
In any case,
there are both political and economic compulsions for PM Modi to stay focussed
on his economic agenda, for he cannot afford any more Bihar.
