As the country waits to see how political events turn out over the next few weeks there is a lot at stake for the industry and business community as well. The next two weeks in my view would have a strong impact on how economy and industry fares over the next year or so. It’s not just about whether the current UPA government survives the vote of confidence in the parliament or not.
While many of us with years of indifference might be neutral to events of the past few months and coming weeks, lets look at the possibilities from a business point of view:
Possibility A: Government fails to survive the vote of confidence and the country is faced with early elections. In all likelihood this will result in increase in inflation rate, free fall on stock exchange due to uncertain economic environment, fall in GDP by probably another 0.5 percentage points, long wait for elections result which will decide the future course of thinking on economic issues and reforms, and ofcourse the fact we will yet again get into a situation with no clear majority and permutations combinations of UPA numbers against NDA numbers.
Possibility B: Government survives the vote and continues for the entire term. Now given next year is election year anyways they will try and go all out for creating a positive image for themselves in the intervening period. Since inflation is not something they have immediate and absolute control on, in all likelihood with support of SP in place of stubborn Left, they will go all out for reforms. Possibly many of the pending bills in parliament: Banking reforms, Insurance reforms, Pension reforms etc would get the nod. Also the likelihood that government might just have enough time to push the deal before US government finishes its term, would create a possibly very positive environment.
My own intuition is that government will survive and we will see some interesting positive movements in the next year or so. If that happens, inflation and stock market might start showing signs of good recovery by end of this year or maybe Diwali….well it often requires a positive sentiment and positive environment to start pushing things.
~~Rohit~~
Rohit Jain