Going by the outcome of the recent Assembly elections and the stunning performance of the debutant Aam Aadmi Party (AAP) in Delhi, India Inc. fears the Lok Sabha elections due this year may throw up a “highly fractured mandate,” which may impede economic recovery.
According to a study, done by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), industrialists feel the current situation has made the general election hard to predict.
Investors, industry leaders and economists are worried about the prospect of an unstable government, which may be forced to “follow more of the populist and left of the centre policies,” irrespective of the party or a coalition that will be in power.
Industry leaders feel that a fractured mandate is not a “good development for the economy at a time when we are getting desperate for a turnaround.”
The emergence of the anti-graft AAP has increased the prospect of the new government departing from reform measures. “On the one hand, there would be increasing expenditure due to populist and mega schemes in the social sector, and on the other, the taxation kitty would not be robust enough in the face of the slowdown,” says the study.
‘Strong party needed’
Regional aspirations and populist measures will create road blocks, the study says, though the country has learnt to live with coalition governments in the past 15 years. What is needed is a strong party to head the government, supported by smaller parties that are committed to a strong growth model.
Call for transparent governance
India Inc. favours a transparent government which will clean up the system and protect honest officers.
It also wants the government to work out its objectives, control its finances and chalk out a blueprint for restoring high growth and generating large-scale employment by boosting the manufacturing sector and investment in big-ticket infrastructure projects.