Modi must deliver

THE economic outlook in India may have improved somewhat statistically compared to most emerging market economies. But real growth is dependent not merely on projecting big bang reforms but on getting them off the ground. There has been an upswing in foreign portfolio investments (FPI) in Indian stock markets since May. In the last eight months, net investment in equities has not been as good as the huge FPI sell-off in June-August 2013. The Rupee has slid below Rs 68 to the dollar. All this is due to the country’s current account and fiscal deficits, the hangover from UPA policy paralysis and the Vodafone retrospective tax mess. Later, the NDA government failed to deliver on reform. Growth and investment have hardly picked up. The recent FPI sell-off is due to large scale redemptions by sovereign wealth funds (SWF) especially from some oil-rich countries. Against that, the US Federal Reserve has raised the interest rate and that along with the accelerating Chinese economic slowdown have increased the risk-aversion of global investors. India is not alone in taking the hit. As a matter of fact, it has succeeded in relatively insulating itself from the oscillations. One reason is that local investors have switched from deploying money in gold and real estate to saving in financial instruments. However, there is no cause for smugness. According to global fund managers, this country has the capacity to ensure dedicated flows. But Prime Minister Narendra Modi and RBI Governor Raghuram Rajan have to be good and ready.