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Global CEOs are buying into Modi’s rosy portrait of India

Reuters/Stefan Wermuth
Let’s talk numbers.
By Anwesha Ganguly
Published Last updated This article is more than 2 years old.

On a day when prime minister Narendra Modi showcased his government’s reform agenda at the World Economic Forum in Davos, a global survey of CEOs listed India among the top five desirable investment destinations in 2018.

The latest findings are from PwC’s 21st CEOs’ survey 2018, in which nearly a tenth of the 1,300 respondents from 85 cities chose India. Asia’s third-largest economy has pipped Japan for the position, despite the latter recording seven straight quarters of economic growth for the first time since 1994.

Up to 9% of the CEOs chose India among the top three destinations important for their company’s overall growth—marginally up from 7% a year earlier. This comes at a time when the World Bank has projected India’s economy to be the fastest-growing major one for the next three years. It is forecast to grow 7.4% in financial year 2019 against 6.7% this year, and at 7.8% in financial year 2020, according to the International Monetary Fund.

At Davos on Tuesday (Jan. 23), Modi played up the state of India’s economy under his watch. “You are aware of the changes we have undertaken and the improvement in our sovereign ratings,” the prime minister said. “We have done away with red tape and rolled out the red carpet.” Behind the bullishness, however, there are concerns about the country’s economic trajectory.

Anxiety and optimism

Overall, the US remained the top country of choice, with 46% of the global CEOs choosing it for overall growth prospects in the next 12 months. China follows in the second position with 33%. Germany and the UK received 20% and 15% of the votes, respectively.

The survey also showed that the overall sentiment of global corporate chiefs is turning risk-averse, with less than half of them “confident” of revenue growth prospects over the next three years. Confidence has not been this low since 2009, right after the global financial crisis.

Their caution is a result of the growing threat of protectionism and geopolitical tension. Over-regulation continues to be a cause of “extreme concern” for CEOs. While those in Asia-pacific are worried about the availability of skilled personnel, North American businessmen are most concerned with cyber threats, the survey showed.

“(CEOs) are more troubled by larger societal and geopolitical shifts than by the dynamics in their own market,” PwC said. Instead, there is anxiety over technology-related developments, including cyber threats, availability of key skills, and artificial intelligence.

The survey also found that despite the many concerns, more entrepreneurs are hopeful that growth will improve globally. Optimism reached a record high in 2018, PwC said, with 57% respondents believing that growth will improve in the next 12 months.

In such circumstances, India’s entry into the top five is significant, and the opportunities are ripe for it to take the right steps and woo global capital. However, even private investors at home aren’t betting the extra buck, so over and above the passionate words, the global CEOs will need more hard evidence of reforms.

📬 A periodic dispatch from the annual session of the United Nations General Assembly in NYC.

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