Over at “India Ink,” the India blog of The New York Times, there’s a terrific interview with Ajay Banga—the CEO of Mastercard and the new chair of the U.S.-India Business Council. It’s a striking presentation at a time when there’s been little but gloom and doom about India in the markets.
Why all that gloom? Here are six reasons:
First, India’s tumultuous politics have, from a corporate perspective, stalled essential reforms. Tax, pension, and FDI reforms have made little headway under the United Progressive Alliance government, and, as I noted in an earlier blog, parliamentary business has been tied up in knots as the leading national and regional parties squabble.
Second, there has been mixed news from the capital markets. Flows of foreign direct investment into India were up in 2011 over the same period in 2010, but Mumbai’s SENSEX stock index was the world’s worst major performer in 2011. And what is more, the rupee has been among Asia’s worst performing currencies amid fiscal problems, including India’s current account deficit, and persistent concerns about capital flows. S&P recently threatened to downgrade India’s credit rating—a threat that India’s finance minister, Pranab Mukherjee, called “a timely warning.”
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