India Inc optimistic about Modi govt, but awaits basic reforms

28 August 2014

India's business leaders are optimistic that the Narendra Modi government will boost the economy, but most are not bearish on new investments as there are no signs yet of improvement on the ground, according to an opinion poll.

According to a survey conducted by The Economic Times, 46 per cent of the respondents in the poll of 50 chief executive officers said they were watching for improved economic indicators before making planned investments that would help revive growth.

Only about a third of the CEOs said they have decided to increase investments; 12 per cent said they are not sure yet or do not have immediate plans to step up investments.

"The road yet to be travelled by the government between intention and action manifests itself here," the newspaper said about the findings of the survey.

On how much the economic situation has changed on the ground, the poll showed only four CEOs gave Modi a rating of above six on a scale of 1 to 10.

Though some signs of recovery have emerged, high interest rates and inflation continue to weigh down the Indian economy as it wades through its longest phase of poor growth in decades.

The government's official GDP data is due on Friday.

The executives also said the economy will rebound going forward, with 72 per cent of those polled predicting annual economic growth of between 6-8 per cent in the next three years.

Almost three-fourths of the CEOs said the new government was meeting their expectations, with 18 per cent saying Modi was performing better than the "most optimistic of expectations".

High hopes that Modi will deliver on his promises also boosted foreign inflows in Indian shares this year. The benchmark Sensex hit a life high of 26,674 on Thursday, heading for its seventh consecutive monthly gain.

The stock market is seen rising further, The Economic Times survey showed, with more than half of the CEOs seeing the Sensex between 27,000 and 35,000 by December 2015.

A public opinion poll released last week by India Today-Hansa Research showed more than 70 per cent of Indians were satisfied with Modi's leadership since he took office in May.

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