BJP led NDA government was sworn in on 26th May, 2014. With the motto of “Sabka Saath, Sabka Vikas”; Narendra Modi led NDA alliance had won an overwhelming mandate of 282 seats (51.8%) in the well of the Parliament. With the run up to the election results, the India Inc. was expectant of a business friendly government and a simpler tax regime which would allow the wider community to reap benefits of a prospering nation.
2 years on, we are faced with Budget 2016 at what seems to be the worst time for the Indian economy in years. The Sensex is just above 23,000 points, having had repeated falls over the last few weeks. The GST Bill, a piece of legislation which promises a standardised tax system on manufacture, sale and consumption of goods and services, has been log jammed in the Rajya Sabha. With the Railways Budget expected today and the Union Budget being presented to the parliament on Monday; this is a crucial time for the country’s financial system.
With the Supreme Court bench headed by Chief Justice G.S. Thakur directing the Reserve Bank of India (RBI) to furnish the list of defaulters of above Rs. 500 crore and companies who have had their loans restructured under any corporate debt restructuring scheme, it highlights a grim future for the banking system. The tremors are already being felt with the bank stocks being one of the worst performing indices in the market. This, coupled with no movement on the black money stashed in foreign accounts makes for a bleak financial forecast. Not to mention reports of bad debts being written off by banks to the tune of Rs. 40,000 crore.
Upon assuming power, the government had all the hallmarks of being business friendly, especially seeing their history in Gujarat. With Vodafone India being asked to pay a retrospective tax of over Rs. 14,200 crore over the Hutch deal; the debate over “tax terrorism”, as it is being termed, is turning to be a mood spoiler for many other international names who might want to step into the Indian market.
All this comes in while the government is trying to push for various schemes and project promoting manufacturing in India.
A significant impact of the Chinese market is also being felt by India in the metals market, which happens to be the other worst performing sector in the Indian market. The devaluation of the Chinese Yuan has made imports for them too expensive, which has caused a significant fall in the Indian Metal stocks among other things.
On the international stage, with a slowing Chinese economy and reducing market sizes in the West, India is one of the largest open markets. The economies of the West, with saturated investment opportunities hold no value for the new business ventures coming up in developing economies like India. The deep impact China is leaving on India does not bode well for the coming years, seeing that India is expected to cross China in terms of population and, by extension, market size in the coming decade or so.
The BJP, with Narendra Modi, had promised a lot in his election manifesto of 2014. India Inc. is yet to see it going into action and the delay in bringing in those promises before the dream of “Ache Din” is just another pun in the wheels of Indian politics.
Ranveer Raj Bhatnagar