BW Communities

Silver Lining Sparkles

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[The last few months have tested the belief of die-hard optimists. Almost nothing seems to be going right for India's economic environment. But in the bleak landscape I think there is still much good that is happening. The big one of course is that the Reserve Bank of India has finally made the cost of credit cheaper. This could well be the beginning of the turnaround. Has the negative sentiment bottomed out? A bit early to say but for the first time in many months one can say that businesses feel a bit perked up. The government is following up the rate cut with diktats to PSU banks to pass on benefits to borrowers. This may take a while, but the mood may just be turning. On the corporate front the business seems to be better than the mood. Investors in some sectors continue to be bullish on Indian growth. International food chain Subway is ready to increase its store from 260 to 1000 in five years. Other global majors remain cautious about the fickle laws of India but continue to invest in India. Domestic giants haven't halted their plans. Mahindra Group announced its high investment research and development centre in Chennai. Bharti Airtel rolled out 4G services despite the policy mess in telecom. Essel Group has added fizz in the M&A space with its stake buys in infra firm IVRCL. The latest CMIE data on project completion is also cause for cheer. Many pending projects were completed in the previous fiscal. This amounts to a value of Rs 4 lakh crore. Some of them had been cleared as far back as 2005. If the pace of completion continues then 2012-13 see sustained stimulus for core sector. Even without fresh investment proposals, the pipeline is worth Rs 8 lakh crore for the New Year. All of these signs that many doughty Indian companies to plod ahead despite severe headwinds. The FDI figures for the 2011-12 till February are highest in previous two years. From about $25 billion in 2009-10, FDI fell to $19.42 bn. The great development is that 2011-12 FDI inflows till February is $28 billion. If FDI in aviation and retail are allowed soon, this year could see flows from this sector too. The biggest success though is on the bilateral and external front. India Pakistan trade ties are moving at a scorching pace. The governments are now talking about allowing cross-border investment within the year.  I had argued that joint venture investment would cement the trade cites between India and Pakistan.  And I have been pleasantly surprised by the speed of developments. India and Africa continue to do greater business with each other. And increasing portion of the $5 billion line of credit offered by India last year is getting utilised. The number of proposals involving Indian and African companies is growing. Myanmar is the other market that can excite overseas investment. Foreign Secretary Ranjan Mathai summed up India's strides on civil nuclear cooperation. He said that India has tied up agreements with ten countries. These are France, US, Russia, Canada, Argentina, UK, Namibia, Mongolia, Kazakhstan & Republic of Korea. Each of the agreements, especially with countries like Namibia, Mongolia and Kazakhstan open new growth opportunities for Indian companies. The growth momentum hasn't returned, the mood seems to be improving. I am hoping that the silver lining will get brighter and soon shine through the clouds. (Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)