A Growth Bias: finally!

There is no predominant reason for the optimism – it is widely ‘distributed’

The importance of the lens we use to look at the world is more significant at some points than others. Right now, seems such a situation. Depending on who one speaks with, it seems like everything has changed or that nothing really has. But what seems widespread is the expectation from the future – and that is unanimously positive.

The shift in sentiment between December 2014 and now, even as several quarters have started to question the pace and efficacy of the Modi government, is an eye-opener. Late last year, at a CFO India conference in Delhi, in an audience of 100 – not a single hand went up when we asked who expected to grow more than 25%. The majority expected a flat year for their top-line and a minority expected single digit growth.

Now, less than four months later, after the presentation of a budget that only received a lukewarm response, at another CFO India meeting with a 100 senior finance professionals – the vast majority expect double digit growth! In fact, more than 15 per cent expect to grow at over 30 per cent this year.

There is no predominant reason for the optimism – it is widely ‘distributed’. Individuals are pleased with the control over inflation, others about the improvement in growth rate, the approach to investments and FDI, and yet others are relieved to have a Government that believes private enterprise adds value and is critical to its growth.

There are reasons beyond the economic – which also feed into an expectation for growth. For example: freedom to institutions such as the Reserve Bank of India and the SEBI to do what they are mandated to. The CFO community unequivocally ‘trusts’ the central bank to safeguard the economy. And the SEBI Chairman’s speech at the same conference reiterated the importance of running well-governed companies since only then will the Government have the confidence to step away and leave the corporate sector free to grow. The fact that SEBI could openly admit to the ‘desire for minimum government’ is a bold step in the right direction, and a reassuring one for the corporate.

And this optimistic expectation outstrips the shadows cast by the fundamental right wing that raises its head frequently. It also out-shadows the other equally big concern around the opaqueness of the Government. The lack of access felt by various segments of society due to this ‘black box’ decision-making framework introduces uncertainty. In the normal course, doomsday experts would have forecast that these concerns will derail expectations. But, at present, these fears are explained away as ‘minor hazards’ in the wake of Mr Modi’s larger vision and his commitment to India’s prosperity. Everyone without exception wants him to win and for themselves to grow.

As I stand by, and objectively try to assess the situation, it appears to hang in balance. There are many factors that point towards a better future for India – but equally the concerns are serious enough to wobble its rosy prospects. How then are people choosing so confidently in favour of growth and prosperity? There is a clear and visible preference for growth. Yes, it is a ‘growth bias’.

Even the skeptical, urban male adult (read CFO!) with responsibility for his enterprise’s numbers is parking skepticism aside to get consumed by their expectation of growth. After a decade of boredom and frustration, corporate India is in no mood to give up. This is much more about how people ‘want to feel’ as opposed to ‘how they should feel’. And if mind over matter is indeed possible, then expectations and the ‘growth bias’ could deliver growth. And India, could be chasing the elusive 8 per cent, soon. At the beginning of a new financial year, this perhaps just what we need. This is how I see the situation.

But what do you think? 

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