This was the year when corporate India fell out with the government. The unshackling of the relationship disrupted an understanding that had taken two decades to build. Everything else fell into this narrative. How it is repaired in 2012 will ensure how far we move away from the debris of a lost year.
It ended with the second quarter growth rate coming down to 6.9%, a mismanaged inflation and mutual recriminations which ended with the Prime Minister telling industry captains in a meeting in the last week of December to shun the blame game and move on in a somewhat positive frame of mind. The Indian political class, bureaucracy as well as the capitalist class can indeed script a new chapter of growth in 2012 if they work together on the massive pent-up investment demand in infrastructure like power, roads, ports, airport and housing. This can happen if the bitter recriminations of 2011 are truly left behind and a domestically-driven growth story is scripted in a public-private partnership mode.
The Prime Minister's meeting with prominent industrialists last fortnight may give some hope in this regard. The chairman of India's largest private sector company Reliance Industries(RIL) told the PM that he would invest over Rs 70,000 crore over the next two years. Other industry heads too made similar commitments. On a positive note, the UPA has a great opportunity to make these investments fructify as soon as possible. For this, the government must set up a fast-track single window which hastens clearance of land and other resources such as coal and minerals which are so critical to the new investments being promised. In short, 2012 must be declared by the UPA as a domestic investment year, and everything must be done to retrieve the economy from the current situation of zero growth in private investment.
The best way to read both, the way 2011 dissipated and the hopes for 2012, lies in data.
Our eight page year-end special edition sails on these data sets. Capping it is the green shoots for 2012 which directs our gaze on to sectors where action is building up.
Venture capital funding, after a slump in the last few years, has now posted a 38% jump in deal volumes and the leaders in the pack are technology industries like energy, banking, healthcare, education and food and beverages. No wonder the science and technology ministry says it is aiming at doubling the spend on scientific research and development in the 12th Five Year Plan to touch at least 2% of GDP by the terminal year. From Rs 75,304 crore in five years, this will mean a spend of Rs 1,60,000 crore by even this year's measure. So organisations like Rural Shores that aim to use the BPOs in the countryside are now big business ideas.
In fact, technology is likely to be the signature tune of 2012. The government is riding its biggest anti-corruption idea on the Electronic Delivery of Services Bill, the last bill to be introduced in 2011.
The Bill promises that for all services states or the Centre puts up for electronic delivery to citizens, no personal interface will be allowed. Violations will attract a hefty fine of up to Rs 20,000 and there is an independent commission to ensure it happens. Technology will also determine how financial inclusion will finally happen in 2012 on the backbone of the mobile platform.
Beyond the kerfuffle on Lokpal, it is technological revolutions like EDS and mobile-based cash transfer that will make the largest swathe of Indians part of the growth story.
Which is why these are the ones that will make the markets move in the New Year. These
companies are insulated from the meltdowns that policy paralysis leads to.
As our lead story makes out, other than the fracture caused by the European meltdown in 2011, the policy paralysis played an equally larger role to push the markets to a low of 15,175 points, the lowest since January 2009.
It is a year when industry has hopefully learned to move away from capturing resources and bending rules to play by the rules. The most memorable moment of the year the capital market regulator, Sebi hauling up seven issuers and their merchant bankers that broke rules including private and public sector entities. No favourites and no holy cows.