India: looking to the futureFollow @PwC_LLP
Author: Bharti Gupta Ramola, Markets Leader, PwC India
India has voted in a party with a simple majority for the first time since 1989 in the sixteenth general elections. This election has resulted in many firsts: the first non-congress majority of independent India, the largest electorate turnout of 550 million people (66.8% of the 814 million total), and the highest number of women winners (although still only a lowly 11%). The Prime Minister-elect, Narendra Modi, exulted, “India has won”.
The Indian bourses began their celebrations early, in anticipation of a growth-oriented government, as the six week poll process got underway. For a look at some of PwC’s pre-election commentary, see the May edition of Global Economy Watch. You may already have seen the many asks of the new government as well as the many predictions about which actions the Narendra Modi-led government will prioritise. I’m going to add to this list by dipping into the results of PwC’s 17th Annual Global CEO Survey, looking specifically at what CEOs in India are most concerned about and what action they’d like the government to take.
CEOs in India listed exchange rate volatility, inadequate basic infrastructure, over-regulation and a lack of key skills as top threats to growth. Not surprisingly, when asked to name government priorities, 79% unanimously chose improving infrastructure (electricity, water supply, transport, housing, and broadband).
The CEOs in India also felt that the government had been ‘ineffective’ or ‘greatly ineffective’ in developing an innovation ecosystem which supports growth, addressing the risks of climate change and protecting diversity, and maintaining the health of the workforce. Regulations were seen as an added burden that increased their cost of operations and made it more difficult for them to attract a skilled workforce.
The new government will need to build trust with corporations. The CEO Survey found the level of trust between government and companies in India to be at the lowest level among all stakeholders (customers and clients, providers of capital, supply chain partners, employees, media, local communities and NGOs).
Last, but not the least, the new government will need to work overtime to feature India among the top investment destinations once again. The 17th Annual Global CEO Survey revealed that India had dropped from fifth position in 2013 to sixth position in 2014.
Clarity on government priorities and the way forward will be apparent as the newly-elected government presents its first budget to parliament in June. In the meantime, let’s enjoy the current optimism and hope that this ‘win’ for Narendra Modi is indeed a win for India.
Bharti joined PwC India in 1984. She's the Market Leader for PwC India and a member of the Indian Leadership team. Her previous leadership roles have included Transactions Leader and Financial Advisory Services Leader. Bharti is also a member of the Global Diversity and Inclusion Council of PwC.