The Hindu Business Line : Will Left be right for reforms, corporatedom asks

THE fine print of Thursday's election results amazed corporate officials on the extent to which the Congress and its allies gained ground. "It's a bit of a surprise," Mr Rahul Bajaj, Chairman, Bajaj Auto Ltd (BAL), said.

By noon, the multi-crore `India Shining' campaign lay trashed. In retrospect, the claim lacked firm moorings nationwide. The NDA Government had needlessly invited attack by articulating a claim in the first place. "People have voted that they don't see India shining," Mr Bajaj said. That is the only clear half of the poll result.

Future economic policy is trifle unclear, courtesy return of coalition arithmetic. Corporate officials say stability is key for continuing economic reforms. "I expect to see a fairly stable Government," Mr Baba Kalyani, Chairman & Managing Director, Bharat Forge Ltd, said.

But causing worry is the sizeable representation from the Left parties and how that may impact policy. Despite being reform-minded, the Congress will need support from the Left parties to form a Government. What sort of economic policy will such a combination have?

Consensus is that the familiar pace of economic reforms may slacken initially as the new government settles down. Subjects such as disinvestment, labour and foreign equity could be interpreted afresh, but overall the reorientation is not equated to a setback for reforms.

"I don't think so. After all, the Congress, Left parties, the SP, the DMK and Laloo Prasad Yadav, all are pro-India," Mr Bajaj said. According to Mr Kalyani, "There may be some adjustments but the reform process should continue."

There is also the reading in some quarters that the Left has changed. A senior official at a city-based industry conglomerate recalled that its recent engagement with the West Bengal Government had been smooth. "It is not the old image of the Left," he said, arguing that even if PSU disinvestment slowed down for a while, real loss to the economy may not be significant.

Barring certain private players losing investment opportunities, the delay hurts none. And ethically, being PSU is not reason enough for sell-out. Should discomfort still persist, then there is one more angle for panacea.

With the NDA as the main Opposition grouping, a major portion of Parliament is perceived as committed to economic reforms. That mix, of the Congress which brought liberalisation and the NDA which took it ahead, guards against any reversal of the reform process, corporate circles said.

Trends from the two IT-savvy States of Andhra Pradesh and Karnataka have highlighted the rural backlash in the mandate. The industry expects an emphasis on rural reforms by the new government.

In itself fine, for as Mr Bajaj put it, a strong market in the interiors is good for two-wheelers too. But how does one read this angle of a rural backlash: Are the villages opposed to reform or are they seeking it? And if it is opposition, won't it be an invitation for a setback with the Left parties peaking at the same time? Remember, one of the first announcements by the new Chief Minister of Andhra Pradesh was free electricity to farmers, questionable from a power sector-reform perspective. "I don't think it is a mandate against reforms," a senior official at a leading FMCG company with backward linkage to agriculture said. There is rural appetite for measures such as direct access to buyers of agricultural produce and related steps announced in January should go through. But it will be immature to expect a complete embrace of everything reform-like by a section of the economy battered for two years by poor rainfall.

A hardening of the Indian posture on WTO demands on agriculture may also happen.

"Things will only get better from now," Mr Naveen Jindal, Joint Managing Director, Jindal Steel & Power, who won the Kurukshetra Lok Sabha seat on a Congress ticket, assured. He declined comment on economic policy.

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