Wednesday 7 March 2012

POPULIST POLICIES IN INDIA

Reuters DEF

POPULISM MAY TRUMP REFORMS IN INDIA

Rajesh Kumar Singh and Manoj Kumar

Reuters, March 7, 2012

NEW DELHI (Reuters) - The Congress party's drubbing in assembly elections proved beyond doubt that its populist politics failed to resonate with voters, and yet investors and consumers alike are bracing for more of the same from the besieged ruling party.

Hemmed in by maverick allies and the fallout from a slew of corruption scandals, the Congress party-led central government has failed to carry out any meaningful structural reforms since it was re-elected in 2009.

Investors had hoped a strong performance in the elections would ease political constraints on Prime Minister Manmohan Singh, giving him room to revisit politically contentious reforms.

"As things stand now, they won't be able to bring any reforms. Their own allies will oppose everything," said D. H. Pai Panandiker, who heads Mumbai-based think-tank RPG Foundation.

Some reforms, such as to land acquisition and foreign investment rules, and the sensitive issue of subsidies on fuel, are crucial to lifting investment and spending in an economy headed for its slowest growth in three years.

Tuesday's poll results, showing Congress fared badly in four of five states, altered the odds of any such push for reforms in the budget.

Rather than becoming the catalyst for a renewed reform push, the state elections would provoke more populism, was the consensus view of analysts.

That is likely to mean more spending on social programmes, such as a pledge to provide universal food security that could bleed public finances but help Congress' general re-election bid in 2014. The budget for the fiscal year that begins April 1 will be unveiled on March 16.

(...) [artículo aquí]

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