New Delhi,Praveena Sharma: A year after Prime Minister Narendra Modi-led National Democratic Alliance (NDA) formed the government at the Centre, the initial euphoria seems to have given way to cautious optimism with most experts rating its one-year performance between 4 and 7, and expecting real changes to start reflecting in the economy only a few years from now.
Rana Kapoor, CEO and managing director, YES Bank, asked "stakeholders" to be patient for see the outcome of the steps taken for economic growth and development.
"Even as we credit the government's accomplishments in its first year of office, it is imperative that we realise that structural changes to a country's socioeconomic fabric do not materialise overnight. As such most stakeholders would need to be patient so long as direction of change remains positive," he said.
A senior telecom official, who spoke on condition of anonymity, said the gargantuan expectations from the Modi government has only led to disappointment in the telecom sector. He grudgingly rated the government's performance 4.
"The expectations were very high but we haven't seen much on the ground. In our sector, the government's performance has been very disappointing. It had created a lot of hype over everything but is lacking in execution," he said.
One of the main grouses of the telecom sector has been the high spectrum prices during the auction, which they feel was the result of government holding back some airwaves to create scarcity. The telecom companies are also not happy with the government's stand on the net neutrality.
"There is a lack of understanding of issues. They (the government) have not been able to come to grips with them. To be charitable to them, I would say, we should give them time to settle down," said the telco official.
What has perturbed him most was the government's lack of direction, which should have come in one year.
Founder and CEO of PropEquity Samir Jasuja's view was opposite to the telco executive's. He believes the government was taking steps in the right direction in the real estate sector.
"In my view, one year is too short a time to create magic. The steps are in the right direction but the government needs more time and support (from the opposition) for necessary reforms to happen," he said.
Jasuja said positive developments in the real estate sector were government's announcements on affordable housing and smart cities, which will be a big boost for industry. He assigned a rating of 6 and believed that despite some setbacks in passing legislations in the Budget sessions of the Parliament a slow revival in the realty sector was imminent.
Abhimanyu Bhandari, a Supreme Court lawyer, complained the policy paralysis that plagued the previous UPA government continued even today with the government and bureaucracy afraid to stick its neck out to take bold decision on various issues.
"Till we deal with this whole issue (of policy paralysis and crippling fear of being investigated) we can't move forward," he said.
Bhandari said the foreign investor's confidence that was shattered during the UPA regime had still not been fully restored with little clarity and consistency in the present government's policies.
"I deal with a lot of international clients, and people are asking me; what is the certainty of investing in India? I might as well buy a piece of land in Kabul. What has happened in the past because of policy flip-flop has shaken the confidence of the investors. Nothing has been done to change that. The perception of India as an unfriendly investor destination needs to be changed. People are still nervous," he said.
Ranen Banerjee, partner – public finance, PricewaterhouseCoopers (PwC) India, said while the government has meticulously worked on putting policy frameworks in place for economic recovery, it's real challenge would be implementing them.
According to him, the biggest setback for the government was the land acquisition Bill getting stuck in a logjam.
"At the end of the day, all large projects need land. Availability of land will prove to be the biggest challenge," he said.
Banerjee also believes the blue skies scenario after the government came to power in May last year was fast fading. The Modi government had the benefit softening global oil prices resulting in snipped import bill and contained inflation. His one-year regime also saw rupee stabilising against US dollar and better than expected monsoon. All this allowed RBI to cut rate.
"All these factors went in favour of the government, giving them breathing space," he said.
Now, with the scenario reversing, he said there was "rational optimism". Global oil prices that have started climbing up again could swell import bill and have inflationary impact.
Unseasonal rains and prediction of a deficient monsoon could compel the government to come out with higher outlay for farm subsidy and adversely impact rural demand. Rupee is also begun weakening against US dollar.
Brokerage houses have already started downgrading India. HSBC Global Research, in a recent report, cut its rating on Indian shares to underweight from overweight. It cited declining earnings growth expectation from Indian companies as a major factor for its downward revision.
"India's capex cycle is yet to pick up and the expected boost in global commodity prices due to China's policy stimulus is negative for India," said the MNC bank's report.
The other reasons were lukewarm response to next rate cute on equities compared to the first one and the negative impact of El Nino on rural and agricultural economy.