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Rediff News  All News  » Business » Investment revival to take four years: Credit Suisse

Investment revival to take four years: Credit Suisse

November 13, 2012 18:19 IST
Credit Suisse has said the impact of recent reforms will have no impact on the investment cycle at least in next three to four years as the past eight years have "sapped the energy out of the economy".

Investments worth a whopping Rs 10 lakh crore (Rs 10 trillion) have been stalled in the past many years due to a complete policy inertia and lack of regulatory, primarily forest, approvals, it said.

However, since September 13, the Finance Ministry under P Chidambaram has unveiled a slew of key reform initiatives on the subsidy and foreign direct investment fronts such as hiking diesel price and capping subsidized cooking gas apart from allowing FDI in key retail trade, power, media sectors among others.

Lauding the latest proposal to set up a National Investment Board, which will act a super-structure when it comes to large investment proposals, it said if the proposal fructifies
it will be one of the most effective reform measures.

Stating that the impact of the recent administrative changes, the brokerage said, "the changes are encouraging as they have put the worryingly anti-business political rhetoric firmly behind us and pulled back economy back from a precipice."

But the report says, "it can take six to eight years from reform intent to economic impact, and investment cycle is unlikely to recover at least for the next three to four years as a complete lull in the reform momentum seen in the past eight years has sapped the energy out of the economy."

Significantly, it also said the reform momentum isn't hostage to how long this government lasts, as policy-making by and large is independent of who is in power.

"Even the oft-discussed fiscal consolidation is unlikely to come about until the economy reaccelerates as historically the government's walk usually differs from the talk," it said.

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