x Abu Dhabi, UAETuesday 25 July 2017

Indian government's charm offensive on corporate leaders falls on deaf ears

Business confidence in the Congress party-led government has nosedived, with growth at a decade low of 5 per cent, stubbornly high inflation, a ballooning deficit, policy drift and a string of corruption scandals.

NEW DELHI // The government is appealing to corporate leaders to "keep the faith" as it struggles to revive India's staggering economy, but the reply from business is they need more than talk to win back their support.

Business confidence in the Congress party-led government has nosedived, with growth at a decade low of 5 per cent, stubbornly high inflation, a ballooning deficit, policy drift and a string of corruption scandals.

The disenchantment is even more worrying for Congress with elections looming next year and business hailing the corporate-friendly opposition leader, Narendra Modi, the chief minister of Gujarat state, as a potential prime minister.

The prime minister, Manmohan Singh, seeking to woo back the key corporate constituency, conceded in a speech to the annual meeting of India's biggest industry group last week that there was a need for a "corrective strategy" to jump- start growth.

"Keep the faith and partner with the government in our effort" to put the economy back on track for high growth, said Mr Singh, considered the father of market reforms in the 1990s that unleashed a two-decade economic boom.

"We grew at an average 8 per cent in the past 10 years and we can get there again," Mr Singh, who has been in power since 2004, told the Confederation of Indian Industry on Wednesday.

But his commitments to further open up the still heavily regulated economy, dismantle investment roadblocks and slice through India's infamous red tape drew yawns from his audience, who said they were tired of promises.

"It's like Rip Van Winkle who has woken up after nine years and recognised past failures," said Ravi Chaudhry, chairman of a Delhi-based business strategy consulting firm, CeNext Consulting and Investment.

"Nobody has confidence, his words are not confidence-inspiring," Mr Chaudhry said. "This all happened under their watch."

Congress has been losing capital - especially during its second stint in power that began in 2009 - among domestic and foreign investors, who have been seeking opportunities elsewhere.

The party wheeled out a string of top ministers as well as the reclusive Nehru-Gandhi scion Rahul Gandhi, often tagged as India's prime minister in waiting, at the industry meeting as part of their charm offensive.

Mr Gandhi's appearance, however, left business leaders scratching their heads as he lectured them in a rambling speech about the need to reduce endemic poverty and act with compassion, while failing to provide solutions to low growth.

"The silver lining is they recognise they have slipped up and it is a positive they are doing something now, but they have only 10 months to turn things around," said Kiran Karnik, former president of India's flagship outsourcing lobby group Nasscom.

Business leaders said they still had high admiration for Mr Singh's economic scholarship. But many said the frail 80-year-old was not a politician able to deal with an unruly cabinet and navigate the hurly-burly political landscape.

"He's basically an economist. What he says now is not going to change the trend - people don't have high expectations of the government any more," said another delegate, Anil Sultan.

Still, the potential opposition candidate for prime minister, Mr Modi, a pillar of the Hindu nationalist Bharatiya Janata Party, remains a controversial figure for failing to halt fatal anti-Muslim rioting in Gujarat in 2002.

Mr Modi's business popularity stems from clean governance and effectiveness as an economic steward that has made Gujarat a go-to investment destination.

Industrialists such as Sunil Bharti Mittal, Ratan Tata and Anil Ambani have all voiced admiration for Mr Modi - prompting Congress to draw a parallel with the German corporate sector's fondness for Adolf Hitler in the 1930s.

"The German corporate sector had a similar fascination with a gentleman who was at the helm of affairs there. The implications for the world at large were disastrous," the Congress spokesman Manish Tewari said recently.