Economy Dec 31, 2012
The year 2012 is now behind us, crises, scams, warts and all. As the economy and Corporate India get ready to ring in the New Year, here is a quick wish list for the economic and business environment for 2013.
1. That Chidu, Subbu walk hand in hand: Finance minister Palaniappan Chidambaram has said he will 'walk alone' if he has to, since Reserve Bank of India governor Duvvuri Subbarao is too busy fighting inflation to help the FM bring growth back. Here's hoping Subbarao and Chidambaram finally find some common ground to walk on, now that inflation has eased just a tad and economic growth needs a serious push forward. India Inc will be hoping that 2013 sees the two walking together, mending the economy. All eyes will be on RBI in January, as North Block hopes Subbarao will finally budge and lower interest rates to spur growth.
2. That India Inc gets its hunger back: There has been just a hint that Indian businesses are beginning to get their acquisitive instincts back and hit the mergers & acquisitions trail again. Though a tough year, 2012 did see some activity and experts predict a much better year for 2013 in terms of M&A deals as companies get their act together and begin to hunt for new markets, technologies and brands both domestically and overseas. The Aditya Birla Group, Ajay Piramal, Sterlite and the UB Group were all involved-for different reasons-in important M&A deals last year and this trend could gain momentum next year. Most of all, dealmakers would be hoping to see some important deals struck by Indian companies in overseas markets as well.
3. That the Mistry unravels in Bombay House: At the $100 billion-plus House of Tata, end-2012 has seen a momentous change. Ratan Tata made way for the 44-year-old Cyrus Mistry as the chairman of Tata Sons, arguably one of the most watched jobs in the Indian corporate sector. With Tata now getting ready for a new innings in philanthropy, Tata employees, shareholders, analysts and the entire corporate sector would be watching how Mistry shapes up in his new role, minus the watchful gaze of Ratan Tata, who groomed him for a full year before Mistry took charge. For Mistry, the next year will be one where he will quickly have to deal with the challenges the global economy puts before group companies and begin to address something which Ratan Tata said the group must address in the future: the bottom of the pyramid.
4. That the aviation sector steers through the turbulence: It's been a terrible year for Indian aviation, with Kingfisher and Air India facing massive troubles and other airline companies also feeling the pinch. With the government allowing foreign direct investment (FDI) in the sector, shareholders, lenders and the public at large will be hoping that the aviation sector mess gets cleared up and the skies get less turbulent so that the average flyer does not end up paying more for a domestic flight than he would if he were flying overseas.
5. That manufacturing gets back to full strength: There was a sharp bounce back in manufacturing in October, when the Index of Industrial Production recorded a smart 8.2 percent growth, surprising analysts. Though there was a base effect and the figure was expected to be healthy, this sharp recovery brought in some much-needed cheer to government and a battle-scarred corporate sector. For 2013, companies and policymakers will be hoping that this does not prove to be a flash in the pan and that the manufacturing sector - with some help from policymakers in Delhi and RBI in Mumbai - gets back firmly to its feet.
6. That the average investor comes back to the equity markets: With much of 2012 being nothing to write home about for the average investor and the equity markets remaining largely choppy and indifferent, most market-watchers will be hoping that 2013 turns out better for the Indian bourses, which could also do with a bit of help from better global cues. US President Barack Obama's daunting task on the Fiscal Cliff and a flagging European economy are surely not helping, but Indian investors would be hoping for better quality paper coming to the markets and markets turning conducive for them to put some part of their hard-earned savings into.
7. That Chidu's disinvestment programme gathers steam: Finance minister Palaniappan Chidambaram has been pushing hard for disinvestments of stakes in select public sector undertakings (PSUs) and some recent instances have brought hope to the government. Over the next few months, the government hopes to accelerate the pace of such PSU share sales to try and bring in much-needed funds to bring the fiscal deficit within limits. The government is working on bringing in around Rs 23,000 crore by way of such sales by March 2013. The markets will be hoping this succeeds in the overall interest of the economy.
8. That government gives a policy push to entrepreneurship: A recent Planning Commission paper made it clear that it was time for serious policy initiatives for India to become a better place to set up new ventures, and create a strong and vibrant ecosystem for entrepreneurship. The universe of startups and angel investors would be hoping that the government heeds the words of the Plan panel and puts in place a framework for ideas, innovation and startups to flourish. A Gallup poll had voted India as the worst in Asia for entrepreneurship. It can't possibly get lower than that. Entrepreneurs will be hoping 2013 changes things for the better.
9. That private equity helps create value more than valuations: The last year has been eminently forgettable for most private equity players. Without any clear exit route thanks to moribund equity markets, and with very little M&A activity, many PE players saw their investments in serious trouble. The Indian corporate sector will, on their part, be hoping for a better 2013 when PEs will start focusing more on creating value for the companies they have invested in rather than merely press for higher multiples to ensure smart exits. Hopefully, PEs, chastened by their experience, will concentrate more on helping companies scale higher levels of growth by really working with them as partners, not just paying lip service to the concept.
10. That Chidu gives a Bang to the Budget: The 2012-13 Budget was an unmitigated disaster and the government spent much of the remainder of 2012 trying to undo the damage done by it, be it on the taxation front or in terms of unrealistic targets set by it. The average Indian and the business community will be hoping that with Chidambaram back in the FM's seat, Budget 2013-14 will truly be an agenda for sustainable growth, not an exercise in populism or tinkering. With time running out, and growth seriously faltering, all eyes will be on the finance minister to, quite literally, stand and deliver on Budget Day.
There will be many other wishes which this list has not included. Sections of the Indian economy will have their own hopes from 2013.
This wishlist above may even look Utopian to many. But given that it's a brand new year, hope floats! Happy 2013!
More From Sourav Majumdar.