'Citibank is more optimistic than RBI'

‘This is clearly a much stronger government, a much strong Prime Minister’s Office and a much more disciplined approach. There is an improvement of the work culture in the government -- people don’t play golf in the mornings anymore. There is a huge attempt going on to making business easier,’ says Rakesh Mohan, executive director at the IMF.

The challenge today, of course, facing us is that we again have to do things to achieve a sustainable growth path of eight per cent plus over the next couple of decades at least,” Rakesh Mohan, executive director at the International Monetary Fund, representing India, Sri Lanka, Bangladesh and Bhutan, told the India Under Modi: One Year In conference at the Asia Society, Washington DC

“And, again, remind ourselves, even if we do succeed in doing 8 per cent plus consistently for the next 30 years, 20 years from now, our GDP will be roughly about what China’s is today,” he predicted. “So, we have no time to lose and we have to really work hard to keep the momentum going.”

“There was clearly a loss of momentum in the last government and that trend has clearly been reversed,” Mohan said. “There’s clearly a new energy and desire to press the growth accelerator.”

Mohan summarised the first year of Modi “as a year of repairs setting the direction for the next 20 years, changing the overall environment to a much greater optimistic mood, and, we are almost forgetting, the kind of despondency that has struck us in the previous couple of years.”

But Mohan acknowledged that several policy planning changes like the Goods and Services Tax, the direct benefits transfer, subsidies reform, the national guarantee scheme, the land-border agreement with Bangladesh, etc was on the anvil and “had indeed been started in the previous government. But they had not been able to accomplish most of them.”

“That is the big difference that has taken place, that almost all of these things are being put into action within one year. That’s quite remarkable given the kind of time it takes to do many of these things.”

There was no denying, Mohan said, “This is clearly a much stronger government, a much strong Prime Minister’s Office and a much more disciplined approach.”

“There is an improvement of the work culture in the government -- people don’t play golf in the mornings anymore. There is a huge attempt going on to making business easier.”

“I did a survey of all the growth forecasts for 2015 and 2016 from both domestic as well as foreign and the range of 7.5 to 8.5 per cent, and guess who’s the most optimistic?” Mohan asked.

“Citibank is more optimistic than the Reserve Bank of India, more optimistic than the Government of India. They have the highest expectation of growth for India.”

“So, this is how the perception has changed and confidence has changed,” he said, and added that this was the same vis-a-vis all of the leading rating agencies too. “Moody’s has gone from stable to positive, Standard & Poor from negative to stable. Clearly optimism is in the air -- and those who put money in the stock market a year ago, have made out like bandits.”

“Despite all this confidence going up,” Mohan conceded, “private investment is still to pick up and that’s what we are waiting for. There is a very difficult external environment and exports are also having great difficulty right now.”