<div><em>India Inc is worried but there is no panic, writes <strong>Ashish Sinha</strong></em><br><br>It certainly made for a lively television news -- pictures of senior Congress leaders and BJP leaders, ministers sparring during the recently concluded Monsoon session of Parliament. For some of the captains of India Inc, these pictures were a glimpse of future trouble. "If legislators don't legislate economy suffers. We still believe that GST will come sooner than later. But that fact that it could not be discussed in the last session troubles us. What if similar scenes get repeated in the next session?" asks a senior executive of a top automotive firm. According to a chief financial officer of a leading FMCG firm, the India growth story has suffered a setback in recent months. "Consumption in rural markets are on a decline. Next quarter looks challenging. The feel good factor, which was there before, is depleting fast."</div><div> </div><div>A recent report by Prabhudas Lilladher captures the current economic picture. As per the report, the merchandise exports have been steadily declining since July 2014 and have been contracting in January-June 2015 period. It says that exports which were at a monthly run rate of $22 billion will continue to face headwinds due to slower global growth. The report points out that the current account deficit has been under control due to a fall in oil prices.</div><div> </div><div>But according to Dr. A Didar Singh, a former civil servant who is now the Secretary General of FICCI, there is no panic at all among India Inc. "They continue to believe in the India growth story. India is still a good investment destination. Of course, the recent global cues have somewhat distorted this image of India but overall the basic fundamentals remain strong," he said.</div><div> </div><div>"Look at road infrastructure where contracts worth over Rs 30,000 crore for 2,500 kilometres were recently awarded. Inflation is under control, concerns over Monsoon are no longer there," said the FICCI Secretary General. "For some, the expectation from the government may have dampened but we all understand that nothing changes dramatically in India. It takes time to implement change. India Inc. has always been patient when it comes to governance issues," he added.</div><div> </div><div>According to market experts, the outlook for the automobile sector also remains optimistic, especially in passenger cars and commercial vehicles till the festival season.</div><div> </div><div>However, the state of affairs for the large Central Public Sector Undertakings (CPSUs) is more worrying, especially those declared sick by the Central government. Today, a number of Public Sector Undertakings are in limbo for one reason or another. According to a senior PSU official, inaction (no clarity on its future, funding, wages, etc.) at the government level is leading to uncertainty across 30-plus CPSUs (out of 65) that have been declared sick (over 50 per cent erosion in net worth during preceding four years) at the end of 2014-15. So far, the central government has shut down five such sick CPSUs that impacted around 2,700 employees. According to a former bureaucrat who has worked on the boards of some of the CPSUs, the government should just hive off some of these sick companies who have no chance for turning around. Big names figure in the list of sick CPSUs. These include BSNL, MTNL, Air India, National Textiles Corporation, Hindustan Antibiotics, Scooters India, Eastern Coal Fields, Bharat Coking Coal, and Hindustan Shipyard among others.</div><div> </div><div>The latest report by India Ratings & Research (Ind-Ra), a Fitch group company says there may be slippages in the disinvestment target of the government which has been budgeted at Rs 69,500 crore for FY16. It says that the department of disinvestment is hopeful of mobilising only Rs 30,000 crore this fiscal. “Ind-Ra believes the food subsidy may again overshoot the budgeted amount by Rs 4,480 crore in FY16. Although fertiliser subsidy for FY16 will fall short of the budgeted amount, Ind-Ra believes like FY15, the remaining amount due in this fiscal will be rolled over to FY17 to meet the budgetary target,” it said.</div><div> </div><div>But there is good news as far as government finances are concerned. According to Ind-Ra,the central government has got an additional fiscal space of Rs 37,160 crore in 2015-16 fiscal on account of both lower oil subsidy and additional revenue generated under some budget heads. Ind-Ra’s estimate shows a total savings of Rs 18,75 crore on oil subsidy for the government. Ind-Ra also expects significant upside to the budgeted amount with respect to excise duty collection in FY16. This is mainly because of the increase in the excise duty on petroleum products between November 2014 and January 20.<br><br><strong>Modi’s Reforms In A Logjam; Read Businessworld magazine 24 September Edition</strong></div>
