Timing Of Cabinet Changes To Cast Shadow On Bid To Hardsell India

The sudden change of guards at some of the key ministries like petroleum and power has come as a bolt from the blue for the delegation led by cabinet secretary currently touring the USA to attract investments in the infrastructure sector.

The foreign investors perceive these changes as a precursor to shift in the governments policies and would like to wait for a clearer picture to emerge before taking a decision to invest in India.

Officials say the timings of the change are being considered inappropriate even by the Indian mission in Washington. The mission is reportedly of the view that under the present circumstances the delegation might not be able to achieve the desired level of success.

 

The delegation is offering a slew of projects valued at over $15 billion in the power, petroleum, telecoms, roads, civil aviation and ports sectors to American investors.

Sources say that as it was, India was not high up in the priority list of American investors because of the 13-party coalition government at the Centre. The investor was not very comfortable with the degree of political stability offered by the coalition.

The protracted negotiations conducted by Enron for the Dabhol project, which was rejected and resurrected by every changed government, both at the Centre and in the state, had already affected the sentiment of the American investor.

This was enforced by the Cogentrix experience. Despite being a fast-track project having former Prime Minister H D Deve Gowdas backing, the project is still awaiting Central counter-guarantee.

Even as things were in a flux over the project level, the sudden reshuffle of key portfolios when the cabinet secretarys delegation was trying to convince the US investors of the security of their investment, has further adversely affected their sentiments.

Though both the new petroleum minister Janeshwar Mishra and the new minister of state for power Y K Alagh are known to be pro-reforms, they are also keen votaries of the public investment in the infrastructure sector.

Another major factor affecting the investors confidence is the fact that Alagh is not a politician and therefore can afford to make brave pronouncements like minimum power tariff for agricultural sector.

But, how much weight he carries with hard-core politicians, who are more concerned about their vote banks, is yet to be tested.

In fact, if the petroleum price-hike issue is any indicator of how political will prevails over economic contingencies in the country, the foreign investors seem to take the words of economists like Alagh with more than just a pinch of salt.