The rapidly changing political scenario has triggered widespread uncertainty among industry circles in the country. However, there was a general sigh of relief following the all-party resolution to pass the Union Budget for 1997-98. However, industrialists feel that the current political instability will hit the countrys economy the most.
Gaurav Swarup, president, Indian Chamber of Commerce, told Business Standard: The industry would like some stability to regain its confidence. The situation will adversely affect Indias economic growth.
Another Calcutta-based industrialist said: We do not know which government will come next. Even if its economic policies are the same, their implementation may differ and that will have its impact on industry.
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Besides, industrialists fear that foreign investments may be hit to a great extent. Though economics and politics have been segregated, foreign investors will still be shaky, said Subir Bose, managing director, Berger Paints. Leading steel corporates feel that the political developments will impede the much-needed growth that was given a fillip by the recent budget.
Sources said the infrastructure sector will receive a major setback because the industries crucial to infrastructure developmentsteel, cement and powerwill be affected due to the crisis in government.
Industrial growth under the United Front government has been slow but sure. Moreover, the crisis comes at an unfortunate time because the positive effects of the recently announced budget were just about to set in, a source said. Senior banking circles in Calcutta have also expressed concern at the sudden fall of the United Front government, adding that it could hamper the growth process in the country.
They hoped the country would not be pushed into general elections as the economy is in no position to cope with the financial burden. The political turmoil has also dealt a blow to many of the Calcutta-based public sector undertakings.
This political instability will prove costly for the sick PSUs as all decisions regarding revival packages will be kept pending till political stability is attained, said Alak Brahmachari, secretary general of the National Confederation of Officers Associations of Central Public Sector Undertakings.
However, D Ray Moulik, director, finance, Bharat Bhari Udyog Nigam Ltd (BBUNL) discounted any major changes in the economic policy of the country.
The basic policy has to be the same as the country cannot afford to lose out on its transformation into a free economy, Moulik said.
Earlier, on Friday, CII president Shekhar Datta had also ruled out any fundamental changes in the economic policy if a new government comes to power.
The economy is too mature to be pulled down by political changes, he said.
Political disturbances can only cause `cosmetic changes in budgetary policies, Datta said, adding, The basic budget proposals and tax policies will remain the same.