Cloud over economy to remain, say experts

The results of the Assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan, announced on Sunday, have gone against the Congress, which is leading the government at the Centre.

The anti-Congress wave seen in the states could make the government go slow on reforms and the pending Bills, experts said.

“There would be uncertainty for at least a year, till a new government comes out with a new policy at a national level,” said N Bhaskara Rao, a political analyst and founder chairman of the Centre for Media Studies.

None of the pending Bills were likely to taken up in the remaining Parliamentary sessions, he said.

Among the major pending Bills, the government was expected to table in Parliament the ones on insurance and the Direct Taxes Code.

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Finance Minister P Chidambaram had met the leader of the Opposition in the Lok Sabha, Sushma Swaraj, and the leader of the Opposition in the Rajya Sabha, Arun Jaitley, to discuss the Bills.

But the election results have lowered all hopes of the Bills being passed soon.

Experts said this was a precursor to the national elections, to be held in May.

“There would be a delay in reforms for some time now,” said Madan Sabnavis, chief economist of CARE Ratings.

He was of the view that nothing much can be done by the party in power, ahead of the Lok Sabha elections.

The victory of the Aam Aadmi Party in Delhi, which became the second largest party in the city, would also add to the Congress’ woes.

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However, economists said it would be difficult for the party to make significant changes. “The AAP can make the right noises.

“But, as an opposition party, it would be difficult to bring about changes in economic policies immediately,” said Sabnavis.

Some experts said political parties should learn from the success story of the AAP. “Basic accountability is expected to be in the system by default as a democracy matures, and all parties have to realise this,” said Jai Mrug, a political analyst and psephologist.

The current structure cannot promise transparency in the system, he said, but would result in more dole-politics.

Mrug said the result might give wrong signals to parties at large.

“The government may think reform is the culprit, which is not the case.

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“People value microeconomic freedom, which deals with structural reforms that needs to be taken care of,” he said.

Rao of the Centre for Media Studies said the results have shown that populist measures would no longer be a game-changer in politics.

“People do not get lured by populist measures unconcerned with budgetary limitations.”

Sabnavis of CARE Ratings said inflation could also be one of the contributing factors to the anti-Congress wave across the states.

On Sunday, Congress President Sonia Gandhi admitted that inflation an issue in the elections.

The Wholesale Price Index-based food inflation has been over 18 per cent for the fifth month in a row in October.