Support wearing out? Modi's cheerleaders in business are disappointed too

It is a known fact that India Inc has been a fervent supporter of Prime Minister Narendra Modi, given his reputation of being business-friendly and a quick decision maker and his track record as chief minister in Gujarat where he took several steps to shake up governance, cut red tape and drive investment into the state.

So it comes as a bit worrying when a report says India Inc is getting concernedby the Modi government’s “lack of boldness” in pushing through economic reforms.

An article in The Economic Times today reported about a closed-door meeting of the Confederation of Industry (CII) where “some of India Inc’s most prominent voices asked whether the government is doing enough to jumpstart growth, unlock infrastructure and spur fresh investments”.

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The article went on to quote an industry titan who said the Modi government was yet to initiate bold measures such as labour reforms while another said the government was pursuing a similar “welfarist” approach to governance as that of its predecessor.

Brought to power on a historic mandate and with aspirations that Modi would initiate bold steps needed to bring the economy out of its worst slump in a decade, the government has rolled out a number of steps such as hiking the gas price, linking diesel prices to the market and taking baby steps to reform the scam-ridden coal sector, among others.

But the government has yet to move significantly on land reforms, with a proposed tweak to the Land Acquisition Act still some time away, the BJP’s own trade unions opposing some steps it has taken to streamline labour laws while states are yet to reach an agreement on the proposed goods and sales tax.

This came in light of another economist saying the PM had “not executed his power forcefully” despite being voted in with an outright majority.

“Modi has achieved the largest consolidation of power in India since Indira Gandhi in the ’70s and ’80s, and he wants to unleash the Indian economy to regain the mojo of the last decade,” Rice University economist Russell Green told PTI yesterday. But despite glitz and fanfare, he has not executed his power forcefully."

But while some may have started feeling early jitters over the lack of bold action, others aren’t giving up hope yet.

“I was hopeful we would see much more aggressive action,” Cornell University professor and an expert on emerging markets, Eswar Prasad, told CNBC-TV18 in an interview yesterday. “We haven’t seen that but there is some method to that temerity. What Mr. Modi seems to be trying to do is make it clear that he is going to get some basic building blocks that are necessary for the economy to work well.”

According to the economist, these “building blocks” were focusing on governance by getting the bureaucratic machinery to work in a more cohesive manner, taming corruption, supporting the central bank to bring down inflation sustainably.

By focusing on things like sanitation (through the Swachh Bharat Abhiyaan), Prasad said the PM was “creating the narrative” that reforms need so that masses feel they are not being effected only to benefit the industry.

The professor, however, added that he would wish the government take more steps to bring in divestment of state companies, changes in the country’s burgeoning subsidy regime as well as providing states with greater incentive to push through reforms.