A new cabinet took office last week. Economic data for the last year was released shortly after. Clearly, the new government has no honeymoon period. It must hit the ground running.
Even though the challenges are clear and everyone knows what needs to be done, the way forward is still not going to be easy. The reason is fairly straightforward. The global environment is not conducive for growing exports. The trend is moving away from global trade as countries close their markets and battle local growth worries.
So, the problems faced by us are structurally no different from others. Growth is elusive in most of the world. The only recipe before governments seems to be to spend their way out of their slow growth woes. The Indian government did that to a reasonable extent in the last five years. But, the bad news is that it was inadequate. We need to do more.
This is where the structural reforms initiated in recent years will give the government headroom. Our tax resources should grow faster with stronger compliance and fewer deterrents. With better bankruptcy and corporate laws, we should attract far more global capital in the next five years than we did over the past decade.
Investments are the only answer. The key is to showcase our hunger for capital and investment. We must market our reforms backed by strong and better corporate governance. Entrepreneurs are yet to climb out of their mindset of cronyism. We need to be a nation in a hurry backed by an encompassing will.
With no other alternative model, the coming years should be most fascinating for equity investing. Risks abound in an era of endless opportunity.
