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London Diary, Arun Jaitley needs to work on a solid tee off

Monday, 30 June 2014 - 8:44am IST | Place: Mumbai | Agency: dna

It's that time of the year when most of India Inc is on vacation and where else to find them... London. I am en route to US on a golf assignment and took a pit stop in the British capital. Between Wimbledon and cricket executives are making the most of an English summer. It's also a good place then to get a dipstick check on expectations building up on the upcoming Indian budget. With a new finance minister at the helm and a government that has taken over on the plank for change, economic expectations are palpable. Except that everyone is hushed preferring to wait and watch. They are instead sharing their hopes in drawing rooms, cricket rendezvous and Wimbledon boxes. But this budget will be anything like strawberries and cream. Less like tennis. More like golf.

A bit like sitting in a deep bunker that needs something stronger than the sand wedge to pull you out. So will the budget session announce what most call 'game changing' reforms? And we are talking jobs, economic prudence, tough decisions and some more of a pocket pinch. At fancy dinner tables in London where many Indian CEOs frequent, the main course is asking the big question—Will Modi do to the budget what he did to the elections? London remains gung-ho.

It's universally accepted that India knows what it needs to fix and that it's only about teeing up the reforms and driving them off. Pent up projects, sitting files, foreign investment and bureaucracy or more. Modi and his team are under pressure and focus during the first budget because it's payback time.

How can Modi give back to the middle class that voted him in? He may have a complex choice with respect to taxation. Many executives are of the belief that reducing taxes and improving efficiency in collection should play well. It's a winning combination when the moods are low. The government is desperate for more tax revenue and the Indian consumer can't wait for a respite. Corporate stability is a massive issue central to the rerun of business confidence.

Jaitley's signals are being watched and heard by Indians sitting in financial hubs like London and New York. The buzz here is that the government will promote industrial growth and may even fix Vodafone issue by undoing the retrospective tax. This will not only be symbolic but will actually lead to a turn in investment mood and attract further monies.

Among other key elements of the London FIIs checklist for Indian economy would include divestment, quick redressal on pending projects, a mandate for long term energy and power sector investments and opening up sectors like defence and retail. The Modi government is interestingly already seen signalling that public sector must pull up its socks. There is an effort to strengthen them but at the same time expose them to the vagaries of market dynamics. Something positive ought to come off that.

It's hard to miss the impression that Modi understands the impact of making a first move. He also knows the notion of public opinion will have its first encounter with the budget. Playing these cards well is not only important for the economy but for his popularity index so that he can get done more and more in the year.

There are no easy fairways and this one for Modi finance team is actually a serious dog leg. Can his team pull up the right clubs and change course by steering themselves clear of hazards and roughs? The next few weeks should tell.

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