The landslide win of the Bharatiya Janata Party (BJP) in Uttar Pradesh, coupled with Goods and Service Tax rollout by middle of this year, is making India Inc optimistic of the future with CEOs saying there is enough stimulus for private companies to restart investments in the coming years.
Increased government spending in infrastructure projects including metro rail projects and new airports would also help revive demand of key private sector companies, they said.
"With effects of demonetisation finally petering out, and with a strong central government, there will be greater confidence amongst businessmen to invest," said Harsh Goenka, chairman of RPG group.
Business leaders said now the path of reforms would ensure increased ease of doing business in India. "We stand in support of all initiatives of PM to give thrust to Indian economy. I can foresee more FDI coming into the country and private investment to get a filip which together with business reforms would create more jobs for the Indian youth," said G P Hinduja, co-chairman of the Hinduja group.
The recent overall performance of Indian companies in the quarter ending December 2016 show divergent results. The automobile, cement and consumer staples were not impacted as severely as earlier thought due to demonetisation though order booking for industrial companies was impacted by the uncertain investment climate. Although optimism prevails in capital goods and Infrastructure companies, deal closure is being delayed. Indian pharmaceuticals and IT companies have been impacted by external events, while banks’ fresh slippage is declining from the high levels of the past. The March quarter is expected to be better than previous quarters, say analysts. With a surge in demand, the idle capacity of corporate India will be used and corporate sector will be encouraged to invest in new capacities, CEOs said. And that's why a decisive result in Uttar Pradesh was key.
Kishore Biyani, founder and CEO, Future Group said the state election results especially in Uttar Pradesh is critical in many ways. "As the central government's development agenda can percolate to the state, which, in my view will help the country in the long run. If UP develops, it will boost India's GDP, since it is a large and populous state," said Biyani.
R C Bhargava, chairman, of India's largest car maker, Maruti Suzuki Ltd said a clear mandate to the BJP in states such as Uttar Pradesh means the people there believe that Modi can deliver on development. "It is an excellent message the people have given. But the responsibility now on Modi will also grow to ensure this mandate of development is delivered on the ground. That will be the key," said he.
Harsh Mariwala, chairman, Marico Ltd said a clear mandate to the BJP in Uttar Pradesh and some other states means that the electorate has evolved. "Elections are no longer about caste and religion, but development. That is an important shift, which is good for the long-term growth of India," he said.