A section of India Inc. is hitting back at Prime Minister Narendra Modi for his coming down heavily on crony capitalism and cleaning up the system that perpetuated corruption, according to a financial services firm.
The section comprising companies with interests in power, infrastructure, metals and mining sectors is staying away from investing in these sectors to "create an artificial slowdown," Ambit Capital Research, quoting sources close to Modi, told Business Standard.
Ironically, Modi is perceived by the Opposition and some analysts as "pro-corporate".
Ambit said its inference is based on its research team's frequent visits to Delhi and other state capitals.
It has also alleged that the Modi's government legislations on tackling black money has ruffled the feathers of Indian businessmen.
"The forthcoming black money Bill seems likely to result in an exodus of Indian businessmen seeking residentship abroad. We have already heard about promoters of several prominent small-midcap companies who have taken tax residentship abroad in the past few weeks," it said.
The research firm, which claims to support Modi's actions, spoke about its "growing conviction that the PM is prioritising a clean-up of the system over pursuit of near-term gross domestic product (GDP) growth".
The research firm finds Modi as having "multi-decadal ambitions" and not ready to compromise on his long-term goals to produce short-term results.
As a result, Ambit cautions about a short-term pain and has cut its GDP forecast to 7 percent to 7 percent from an earlier estimate of 7.5 percent for FY16.
Macquarie Capital also expressed its satifaction over the PM's performance in the first year by giving a '7/10' rating. Macquarie said the government got rid of crony capitalism by "moving approval process online, roll out a auction system for resources and concentrating on improving measures towards ease of doing business."
American investors, who remain 'overweight' on India, complain that they haven't observed any change on the ground despite the Narendra Modi government completing one year in power.