India’s Prime Minister Narendra Modi speaks at an industrial trade fair in Hannover, Germany on Sunday. Mr. Modi will arrive in Canada on Tuesday.TOBIAS SCHWARZ/AFP / Getty Images
Ever since oil prices collapsed, Ramkali has saved roughly 300 rupees (about six dollars) each time she makes the trip to bring pottery from her small village to sell at her roadside stall in South Delhi.
The savings are a welcome relief for Ramkali. She figures cheaper fuel prices must be the work of India's new Prime Minister, Narendra Modi, who swept to power last May by promising development, jobs and an improved economy.
"Modi's doing a good job. I'm feeling good because the prices of essential things have been reduced," says Ramkali, who lives in a one-room apartment with a dirt floor cluttered with cooking supplies and a single bed that she shares with her husband and four children.
Mr. Modi can't take credit for the plunge in global oil prices, but cheaper fuel and a subdued inflation rate have nonetheless given India's leader support as he seeks to revitalize the country's economy.
He is to arrive in Canada this week for a state visit, and is expected to appeal for Canadian investment in India.
Mr. Modi's job was never going to be easy. He inherited a government apparatus paralyzed by the previous administration's numerous corruption scandals and an economy that went from red-hot 11-per-cent GDP growth to years mired at about 5 per cent as foreign investors lost confidence and Indian businesses invested abroad for safer returns.
But because India is a net importer of energy, the country has benefited hugely from the ongoing oil slump.
Inflation is now down to about 5 per cent, after soaring about 8 and 9 per cent in previous years, and Mr. Modi's government has begun to cut diesel subsidies – with lower market prices softening the hit to farmers and others who rely on the fuel.
"Oil prices have been a great boon, a bonanza," says Saumitra Chaudhuri, an economic adviser to India's last prime minister who sat on a high-level government committee in 2008 that examined the implications of the rise in crude oil prices for India.
And even though Mr. Modi's reforms have not been as bold as many businesses hoped, the improving investment climate and a steady, pro-business policy environment is beginning to reignite faith in India's potential as a vast emerging market.
Optimism is rising about India finally being able to meet its potential, after years of being an elusive success story – where companies chased India's huge domestic market of nearly 1.3 billion people but often got buried under red tape.
Now, many business people say, that is changing. After corruption scandals in India's telecom and coal sectors, which cost the exchequer tens of billions of dollars, Mr. Modi has cleanly and transparently auctioned these licences off – giving industry confidence even as he reaps a windfall from those who want to partake in India's booming wireless market and vast coal reserves.
Anand Prasad, a partner at prominent Delhi law firm Trilegal who deals with international M&A, says he was originally skeptical about whether there had been much change under Mr. Modi. But client after client in India extolled the new Prime Minister's virtues, and told him how different things were – that bureaucrats were open to meetings, and were quick to move files forward. And now, in meetings overseas, he says the India narrative has regained its previous momentum.
"As a law firm, we're beginning to see more inquiries for investments and acquisitions and deals," Mr. Prasad says. "When we travel overseas, the difference that you see is that, two years back, no one wanted to discuss India. India had fallen off the radar. Now it's back on the radar. People are looking at India as an investment destination once again."
But Mr. Prasad warned that Mr. Modi's central government has only so much power to improve the ease of doing business in a political system in which state-level governments vary widely in terms of levels of corruption. Mr. Modi, who is sending more tax revenues to the states, lured investment to his own state of Gujarat by offering cheap land and reliable power. But other governments are not so business friendly, and enforcing contracts – in India's clogged legal system – is next to impossible, Mr. Prasad says.
He gives one example of a client who failed to get back a security deposit of $100,000 (U.S.) from a corporate landlord; since the case could haven taken years and there are no punitive damages in India to make a lawsuit worth it – or to discourage breaking contracts in the first place – there was little point in pursuing the case. And the landlord might never have paid anyway, he adds.
But elsewhere in the Indian economy, there is more optimism – particularly among the younger, more technology-oriented industries that are just beginning to surge in India's vibrant online and e-commerce industries.
On a muggy Monday morning in Mumbai, Satyen Kothari has just got off a conference call in his pared-down office. Mr. Kothari founded Citrus Pay, an online payments company, in 2011 and has grown the company as India's still-nascent e-commerce industry begins to soar.
He has seen the debilitating effects of India's corruption scandals. Now that Mr. Modi is in power, Mr. Kothari is more hopeful as he builds the business. His firm now provides the back-end, online payment systems for some of India's best-known companies: Indigo, a large domestic airline; Bharti Airtel, the largest cellphone provider; Meru, the biggest taxi company; and so on. Its investors include Sequoia Capital, the famous Silicon Valley venture fund. Kothari's company now has 12 million users and employs about 140 people.
He says Mr. Modi is making all the right noises. He feels the time finally looks right for the awaited Indian economic moment: a convergence of India's demographics (the largest youth population in the world, with more than 356 million people aged 10 to 24), technology (900 million cellphone connections) and global structural shifts.
"It's going to be a tidal wave. This wave will be unstoppable," Mr. Kothari says. "The Chinese market is a bit tapped out, so people are looking at what's next."