NEW DELHI, February 8: The country's political parties have made bold pledges to build a strong and self-reliant nation in their election manifestos, but have failed to prescribe the right medicine for economic revival, analysts said on Sunday.The winners in the elections which get under way on February 16 and end on March 7 may not get time to uncork the champagne.
The new government will face the urgent task of breathing new life into exports, industrial growth and business confidence, and tightening the fiscal belt. "The economic agendas of the political parties are like a road map...long-term objectives and not for immediate issues," said RPG group corporate advisor DH Pai Panandikar.
"It is all populist slogans....economic rationale has taken a backstage," Indian Council for Research on International Economic Relations director SP Gupta said.
Caught in the pincer grip of political uncertainty and the crisis in east Asia, the economy has slowed in recent months. India expects its gross domesticproduct (GDP) to grow by 6 per cent in Financial 1997-98 (April-March) against 7.5 per cent in 1995-96 and an average of 7 per cent during the last three years.
Analysts say that could be too optimistic.
Exports dipped in December, for the second successive month, by 5.13 per cent from a year earlier. The industrial sector has shown only faint signs of revival, with output growing at a year-on-year rate of 5.0 per cent in April-November 1997 against 9.2 percent in the same period of 1996.
"There is no immediate attention on how to tackle the issues of industrial growth, exports," said Panandikar. The Congress party, which tore down decades-old socialist controls in 1991 and launched free-market reforms, has lived up to its reputation of being a pro-reform party, analysts said.
But they said that while Congress has promised to encourage foreign direct investment and foreign institutional investors, its manifesto has failed to present a coherent strategy to boost growth. "It is all jumbled," Guptasaid.
Economists say the United Front multi-party coalition which was ousted from power two months ago, is still caught between the ideological extremes of the left and free-market advocacy.
"The United Front manifesto definitely bears the stamp of the left parties," said an economist with a Bombay-based foreign brokerage who asked not to be identified. The Hindu nationalist Bharatiya Janata party (BJP), which opinion polls have consistently shown is the front-runner, has vowed to implement "swadeshi", or "economic nationalism", and shelter domestic industry from foreign competition. "But the BJP is the only party which has emphasised that it would restore confidence to domestic businessmen," Gupta said.
A wobbly rupee, lacklustre capital market, credit tightening and political instability have dampened business confidence. "The BJP is pragmatic on some issues but takes a protectionist stance on foreign investment," said the economist. The BJP said that, if voted to power, it would restrict foreigndirect investment to non-priority areas.
"There has to be a screening authority which has to define what are non-priority sectors....This implies there will be more controls on foreign investment," Panandikar said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
