In late December, Modi issued five urgent ordinances, similar to executive orders, to jumpstart the economy. The biggest one entailed easing land acquisition rules to cut red tape for stalled development projects valued at nearly $300 billion. One ordinance seeks to increase foreign investments in the insurance sector while another would allow private sector participation in coal mining. India’s parliament has to approve the new ordinances at their next session in February before they’ll be enacted.’
Some 311 million Indians live without electricity but the government aims to provide access to all of them by 2017. To achieve that, Modi is calling on the government, which owns 90 percent of the country’s coal reserves but is horribly inefficient, to auction its coal mines to private companies. India is home to the world’s fifth-largest coal reserves.
Power outages cost the country $68 billion in economic output, or 4 percent of GDP in 2013. Any improvement in electricity production would generate a meaningful difference in economic activity.
With a business-friendly regime at the helm, India will attract more foreign investments.
4. The “Make in India” Program
In September, Modi unveiled the “Make in India” campaign to fuel manufacturing and create jobs. The government has pledged to remove entry barriers to business and create a competitive tax scheme to juice manufacturing of low-cost products for both the domestic and foreign markets. The International Monetary Fund forecasts India’s economy will grow by 6.4 percent in 2015 after expanding 5.6 percent last year.
5. Central Bank Easing
The Reserve Bank of India (RBI) shocked global markets this month by lowering the policy interest rate by 0.25 percentage points to 7.75 percent. It was the first rate cut in nearly two years, as lower food and oil prices reduced inflation. Lower interest rates will strengthen corporate balance sheets and encourage business borrowing, especially in interest-rate sensitive sectors like real estate and banking.
Philip J. DeAngelo, is the owner and managing director of Focused Wealth Management, an SEC-registered investment advisor with $420 million in assets under management in Highland, N.Y.