“Narendra Modi govt first year performance overall good”

Mumbai

Underplaying the recent sharp dip in the market indices, leading brokerage Edelweiss Capital has said the Narendra Modi-led government’s performance is “overall good” in its first year.

“The market has gone up over 60 per cent in the recent years. Some correction is part and parcel of the market. At the present level, market is well-balanced,” Edelweiss group chairman and chief executive Rashesh Shah told PTI.

On the first year performance of the Modi government, he said: “It has been overall good, especially on the reforms side. Having said that, let me add that I would like the government to start spending. Even within the budgeted spending level the government has more room to spend, which can really kick-start the economy.”

Many corporates and fund houses have been blaming lack of policy reforms as the main reason for the fall the steep over 10 per cent fall in the market since April.

Capping their disappointments was the MAT tax notice sent to FIIs with retrospective effect sent out late March.

After the MAT notices were slapped on FIIs, they were on a selling spree, pulling out close to USD 2 billion from the equities and debt, destabilising the rupee.

While rupee lost more than 1 per cent year-to-date, the Sensex is down more than 10 per cent, spooked by what the marketmen say as lack of reforms (uncertainty on the new land bill and the GST Bill) and the tax terrorism.

But Shah does not believe so.

According to him, this is one of the best things to have happened to the market, which has close to 30 per cent FII ownership.

One of the positive outcomes of this FII selloff is that the domestic financial institutions are filling up the gap created by the selling by foreign funds, Shah pointed out.

“DFIs will create the fund flow and FIIs will create the gap, which is very good for the market, as FIIs’ holding in the market has been on a record high,” Shah noted.

“Modi govt gets 7 on 10 for first year’s performance”

New Delhi

Giving the Modi government 7 out of 10 for its first year’s performance, industry body Assocham today said it still needs to cover some ground on tax issues and a lot more needs to be done on improving ease of doing business.

The country’s macro-economic situation has improved in the past one year with decline in inflation, stability in currency and attractive financial markets, it said.

“However, the NDA government has to cover some ground in terms of taxation issues, particularly with regard to FIIs’ problems on retrospective liabilities and in taking big-ticket infrastructure projects off the ground,” Assocham said in a statement.

It also said a lot more needs to be done on improving ease of doing business at the state level.

“The industry and the commentators must realise that an economy of two trillion dollars, well integrated with the world, can’t be catapulted into high growth, just with the change of the government.

“However much the government is sincere, policy tweaking, legislative changes and revival of investment appetite need to be followed by increase in consumer demand, and would take time of say, 24-30 months.

“And then, a lot would also depend on the global markets which are subdued,” Assocham said.

The government, it said, has made a good beginning, though it now needs to move faster on things like Goods and Services Tax and send a new signal of confidence.

“Seven out of ten, according to Assocham, is the right score for the Narendra Modi government on completion of first year in office,” the chamber said.

Assocham President Rana Kapoor said government deserves credit for somehow making Parliament run better with the result that some of the difficult legislations have been cleared, including raising FDI limits in insurance and defence sectors to 49 per cent.

“Likewise, investor confidence and transparency have been achieved with the successful completion of auction of coal blocks and spectrum, raking in over Rs 3 lakh crore for the Centre and states,” Kapoor said.

However, the chamber said the focus must remain on further improving ease of doing business, as at the state level, a lot needs to be done.

Besides, the global environment for manufacturing is not conducive, as has been reflected in the downward trends in exports of merchandise goods.

Commenting on industrial output, it said that the growth in industrial production is not only a function of government policies but also a lot of domestic and global macro factors, which do not seem to be very friendly.

PTI