SOS from India Inc: Get political will, save economy

The chairman emeritus of Infosys is concerned about the setback to India's image over the past three to four months. “As an Indian, I feel sad we have come to this state,” he said to Morgan Stanley, a global bank, according to a research report dated 11 May 2012.

Azim Premji, chairman of Wipro, India's third largest IT and IT services provider too hit out at the condition of the Indian economy, stating his disappointment with the current state of affairs. “India is functioning without a leader,” the IT Czar told analysts at a meet.

Amid rising concerns over the country's economic growth prospects, the HDFC chairman said that the only thing holding India back at this juncture was "lack of political will" and investors could no longer be placated by talks of "long-term fundamentals".

In a report, credit rating agency Standard and Poor's has warned that India may become the first among the BRIC - Brazil, Russia, India and China - countries to lose its investment grade rating, citing slowing GDP growth and political roadblocks to economic policymaking as some of the factors that could lead to such an action.

The chairman of Arcelor Mittal feels that concerns over policy and approval issues in India will continue to remain. "We continue to experience difficulties in India. My belief is that Indian projects may not see the light for five to 10 years," he said.

Expressing concern over the delay in key reforms for “years and years”, the chairman of the capital markets regulator said there was an urgent need to revive investor sentiment and arrest faltering growth. “Some of the reforms, which have long been pending and one example being pension reforms...it has been years and years that some of these reforms...are yet to come through,” he said.

The president of the Confederation of Indian Industry said that economic growth slowed to a nine-year low of 6.5 per cent in 2011-12 and other factors, including high fiscal deficit, rising prices and deceleration in investment activity, have further exacerbated the situation. “We have had 9 per cent growth. It is not only an issue of coalition politics. The reform process has slowed down due to lack of governance," he added.

Global banking giant HSBC termed India as a "gasping elephant" as the slowdown in economic growth was "deepening" and the downside risks to the outlook have increased. HSBC said this when India's economic growth rate slowed to a nine-year low in the March quarter at 5.3 per cent and 6.5 per cent for 2011-12.

The advisor to the Prime Minister on public information, infrastructure and innovation said that India needs to focus on judicial reforms. “We've got to learn to restructure our institutions. We are not really restructuring our institutions, our institutions are obsolete, old. We are not really in tune with the needs of the 21st century,” he said.

As growth slows and expectations of rate cuts rise, Aditya Puri, managing director of HDFC Bank, says that while some room for rate easing has opened up, any dramatic reduction in rates is unlikely. “The weak GDP data is a call for action to all policymakers,” he warned.

Terming the economic situation as "grave", industry body FICCI asked the government to go in for bold steps like allowing FDI in multi-brand retail, cut interest rates and halt funding of welfare activities to revive growth. "India is in the midst of a grave economic crisis. The combination of low growth, high inflation, high fiscal deficit and the highest ever trade account deficit has raised a lot of concern," FICCI president R.V. Kanoria said.