Prime Minister Narendra Modi told a gathering of business leaders on Tuesday that the country was on the verge of becoming the world’s most digitised economy, and avoided direct mention of the economic hit from demonetisation.
Speaking at India’s biggest investor summit, organised in his home state of Gujarat, Mr Modi said his government was strongly committed to continue reforming the Indian economy.
“We are working to adopt and absorb newer technologies, to bring about transparency, and to end discretion,” Mr Modi told the summit, adding that foreign direct investment in the country has topped $130 billion in his two-and-a-half years in office.
“We are on the threshold of becoming the world’s most digitised economy. Most of you wanted this change in India. I am proud to say that it is happening before you.
“Creating an enabling environment for business, and attracting investments, is my top priority,” the Prime Minister said.
Mr Modi’s address to the Vibrant Gujarat investor gathering comes weeks after his shock decision to ban 500 and 1,000 rupee notes.
The move caused widespread anger among millions of people across the country, as they endured long queues at banks and ATMs to draw money or deposit old notes about to expire.
The radical gambit has been billed as an attempt to root out corruption, end terror financing and move the country into the age of digital payments.
But Mr Modi’s government has struggled to produce enough new bank notes to meet demand, leading to a temporary slump in business in an economy that is heavily dependent on cash.
India’s corporate earnings expectations have taken a hit.
Fears that the note ban will dent profits in the latest quarter have led to a 2.25 per cent drop in earnings estimates since November 8 for those companies that are part of the country’s benchmark index, according to Thomson Reuters data.
Still, government officials are optimistic that major investment pledges will come out of the meeting, which is being held at a sprawling convention center in Gandhinagar.
Skepticism exists, however, over how many of the hundreds of anticipated memorandums of understanding expected to be signed at the week-long summit will translate into real spending.
“The summit is a symbolic gesture to lure investment, but companies will only invest if there are changes at the macro policy level,” said professor Sebastian Morris of the Indian Institute of Management in Ahmedabad, noting investors need to see infrastructure and support.
On Tuesday, Mr Modi was set to chair a CEO roundtable attended by nearly 60 top executives, including Cisco’s John Chambers, Trafigura Beheer’s Jeremy Weir, Fairfax Financial’s Prem Watsa and Peter Huntsman of Huntsman Corp, along with Indian business titans such as Mukesh Ambani and Ratan Tata.
“This time we want to hand-hold investors and assure them that the business environment is perfect for them to launch new businesses,” said Deepak Bagla, managing director of Invest India, a vehicle set up to guide investments into the country.