India Inc welcomes Congress

MANDATE 2004

With communist parties set to join the next ruling coalition at the Centre, India Inc welcomed the Congress' return to power with caution.

Several businessmen felt the Left parties could make the Congress go slow on the next generation of economic reforms including divestment and liberalisation of foreign direct investment norms in key sectors like telecom, civil aviation and retail.

"Nothing should be done to reverse the economic progress if we have to be recognised as an economic force in the world," Essar Group chairman Shashi Ruia said.

"Indian industry seeks stability in the political environment to ensure a combined surge in economic development and growth," added Bombay Chamber of Commerce and Industry president Nasser Munjee.

The first casualty could be the government's divestment programme, with the Left Parties taking a tough stand against the Vajpayee government's selloff agenda. (Outgoing divestment minister Arun Shourie had recently said the centre could raise up to Rs 100,000 crore every year through divestment of its stake in public sector undertakings.)

Said Avinash Vazirani, chief investment officer (Asia and Africa), BNP Paribas Asset Management Company, UK: "It seems clear than privatisation will not move forward as same as that of the BJP."

Playing down apprehensions of the divestment programme getting derailed, N. Srinivasan, director general-designate of the Confederation of Indian Industry, told Business Standard: "Progressive disinvestment policies should not suffer. There could be some issues regarding the pace and degree of emphasis. Congress has a positive approach towards privatisation but will restrict it to sectors that will not be washed out if opened up. The party will have to decide on the disinvestment process like strategic sales, sale to private company or allowing foreign players."

So far as opening up the retail business for FDI is concerned, there are apprehensions that the new government might go slow on it, though small traders have traditionally been BJP supporters.

"There could be some uncertainty related to FDI in retail sector with Congress at the centre but the party should realise the importance of foreign investment in the retail sector and formulate policies accordingly," Vikram Bakshi, managing director of McDonalds and head of the CII retail committee, said.

However, business tried to take heart from the CPM's pro-reform agenda in West Bengal. "There is no concern in Indian industry on the Left being a part of the ruling coalition. The CPM government has been most active as regards privatisation of state-owned assets and attracting FDI. In principle and practice, it cannot take a contradictory position at the centre," Amit Mitra, the secretary-general of the Ficci.