With Union Budget knocking on our doors, can Chidambaram soothe the nerves of the industry who are edgy because of a spiraling current account deficit and slowing economic growth?
Absolutely, thinks industry insider Manish Chokhani, Chief Economist at Axis Capital. Speaking to Senthil Chengalvarayan on a late night Face the Budget discussion on CNN-IBN, the economist said,”Chidambaram beings great credibility to the market. He is that one man in the entire bunch of people who can turn things around.”
According to him, Chidambaram has reversed many of the populist decisions that were taken by his predecessor Pranab Mukherjee. And more importantly made the dissent over reforms in the Congress Party almost non-existent.
“The fact that he has got the party aligned to him and is convinced that we cant spend money we dont have, will help the Indian economy,” Chengalvarayan said. According to him, he cant curb capital expenditure because that is the only thing that can boost investor confidence thus letting the investor come back back into the growth story of India once again.
“You have to think of easy profit opportunities, something which happened in the early years of economic reforms and also early 2000s. Now with the issue of bank licences to business houses and financial institutions they are trying to do the same,” he added.
Shankkar Aiyar however was not that hopeful. According to him the roadmap to reforms was stalled because, “The right pocket in the government does not know what the left pocket is doing.” Environment clearances, blanket ban on mining and coal block allocation delays were several things that were holding up economic growth, he added.
The bottomline is that industry wants Chidambaram to boost growth, remove inordinate delays in projects and convert populist sops to targeted expenditure. “If you put the stalled projects and the falling economic growth as shown in the pre-budget Economic Survey you can put the (economic) picture together,” Aiyar said.
You can watch the entire discussion Face the Budget aired on CNN-IBN here.