India Inc expectations 20 yr high from new govt: ASSOCHAM

However, there are risks of highly built up expectations, says ASSOCHAM

April 28, 2014 4:27 IST | India Infoline News Service

The level of expectations from the new government set to take office next month has risen to an all-time high, never seen in the last two decades from India Inc which is setting different sets of agenda for the new Prime Minister – from revival of economic growth to fixing inflation and bringing down interest rates and unemployment within few months of taking over, an ASSOCHAM CEO survey has indicated.

“The expectation level is soaring by the day among different segments of the economy- stock markets, industry, trade, multilateral institutions and foreign investors.  Heads of the diplomatic missions are also pinning their excessive hopes on the next government as they would like to reinforce their economic ties with India……

“However, there are risks of highly built up expectations. Any deviations in the election results, contrary to expectations can be very harmful because that can lead to a knee-jerk reaction,” the ASSOCHAM survey report cautioned.

The Associated Chamber of Commerce and Industry of India (ASSOCHAM) surveyed nearly 450 CEOs engaged in different sectors such as manufacturing, finance, real estates, banking and IT in the month of March. The survey was conducted in Delhi, Mumbai, Bangalore, Ahemdabad, Cochin, Kolkata, Hyderabad, Chandigarh, Dehradun covering all the large, medium and small enterprises.

Though they retained their optimism about India receiving a decisive, strong and stable government, as many as 67 per cent of the sorporate heads agreed the expectations are excessive, at least on the delivery front.

“The run-up in the stock markets in the last few months is another pointer to a huge level of expectations….Our survey shows that at least in the last 20 years, there was never such level of expectations from a new government,” ASSOCHAM Secretary General Mr. D S Rawat said.

The survey showed that the expectation level was spread across major sectors of the industry in particular but the maximum optimism was seen among those engaged in financial services, banking real estate and consumer goods.

As many as 54 per cent of the respondents in the survey said though issues like inflation and revival of economic growth will take long, they still expect some major morale-boosting announcements from the new regime in New Delhi in terms of reforms that will promise ease of doing business, unclogging of infrastructure projects stuck for environmental clearances.

However, the ASSOCHAM own assessment indicates that with the possibility of El Nino and consequent  deficient rainfall in the coming Monsoon season, the issue of food inflation and its impact on the interest rates will remain among the most important for the new Finance Minister, Agriculture Minister and the Prime Minister.

The consumer  inflation which has become more of a benchmark for the RBI , has remained excessively high for a number of food items of common-man, who is also expecting some big time steps from the new government.  For the common-man, the inflation stays one of the most important issues at the ballot boxes.

For instance the March CPI inflation for fruits was 17.19 per cent and vegetables 16.80 per cent, milk and milk products – 11 per cent, cereals and products 9.61 per cent, egg , fish and meat – 9.54 per cent.

While the prices of items like sugar, oils and fats and to some extent pulses have remained subdued, the Monsoon deficiency will exert pressure even on them…

“No sooner the new government takes office, the most important economic indicator requiring immediate action will be inflation. If it rides on a popularity chart, as is expected, attending to this issue would become of paramount importance,” the ASSOCHAM paper said.

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