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Top Chief Financial Officers (CFOs) in India have voiced a mix of caution and optimism regarding the effects of coalition governance on India Inc and the economy. Despite concerns over policy delays and consistency, there’s faith in India’s robust economic fundamentals and ongoing reforms. Proactive strategies and government engagement are deemed crucial amid this period of political and economic uncertainty.
In the recent Lok Sabha elections, the Narendra Modi-led National Democratic Alliance (NDA) secured 294 seats, with the Bharatiya Janata Party (BJP) bagging 240 seats. This outcome necessitates reliance on allies like the Telugu Desam Party (TDP) and Janata Dal (United) to meet the 272-seat threshold for government formation. Conversely, the Opposition INDIA bloc, led by the Congress and other regional parties, clinched a total of 232 seats, paving the way for a vibrant political landscape.
The 2024 elections heralded the return of coalition governance to India, unlike in Prime Minister Modi‘s previous two terms. However, the NDA, spearheaded by the BJP, retains a commanding majority. ETCFO has delved into the potential repercussions of this coalition government on India Inc. and the economy. Will the new government succeed in implementing robust decisions and reforms akin to the past decade, or will the exigencies of coalition politics curtail their unhindered governance? Here’s what leading Indian CFOs had to say.
Mixed Views on Coalition Governance
Sneha Oberoi, CFO at Suzuki Motorcycle Private India Ltd, underscored potential policy delays due to the coalition setup, posing risks to international business confidence. “Economic growth hinges on various factors, but delayed policy decisions will undoubtedly yield adverse effects,” she observed.
Aneel Gambhir, CFO of DTDC, stressed the importance of adaptability and proactive engagement with policymakers. While coalition governments offer diverse perspectives and inclusive growth, they present challenges in policy consistency and economic stability.
Raghupati Mishra, CFO of LIBERTY Steel Group, struck a positive chord, citing the historical efficacy of coalition governments. He lauded the NDA’s achievement, expressing confidence in sustained business continuity and confidence, citing previous governments’ adeptness in implementing economic reforms despite fewer seats.
Gurvinder Singh, CFO of Mitsubishi Electric, echoed similar sentiments, asserting the resilience of India’s economic fundamentals, buoyed by initiatives like “Make in India” and state incentives. He envisioned no significant impact on economic stability, policy consistency, or business confidence under coalition governance.
Abhinav Jain, CFO of CoinDCX, sees the 240 seats secured by BJP and 294 with NDA as commendable, suggesting it won’t derail growth if NDA forms the government and INDI Alliance provides checks. He noted market expectations but views the current outcome favorably unless NDA fails to form the government.
Concerns Over Pace of Reforms
A CFO from a leading logistics company who did not wish to be identified voiced apprehensions about the sluggish pace of transformative reforms, potentially denting business confidence. Nonetheless, optimism prevails concerning economic stability and ongoing policy endeavours.
Sameer Agarwal, Group CFO of Manipal Hospitals, stressed the necessity of a majority government while hoping for sustained growth momentum, policy stability, and inflation control under any ruling party to drive investment and job creation.
Dr. Kishore Nuthalapati, CFO at BEKEM Infra Projects Pvt Ltd., acknowledged potential short-term disruptions in business confidence due to coalition governance. However, he remained sanguine about the resilience of India’s economy, foreseeing minimal impact on long-term projects and a stable financial outlook.
Optimism Amid Uncertainty
In sum, India’s CFOs navigate the uncertainties of coalition governance with tempered optimism. They advocate for adaptive strategies, continuous policy monitoring, and active government engagement to foster a stable business environment. Despite challenges, the Indian economy’s resilience and ongoing reforms bode well for future growth.
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