Industry, markets turn nervous

The rupee also plummeted by over 20 paise to 42.76against the dollar in the last one week. “Chances of the rupee falling below the 43 level are great in the changed circumstances. Demand for dollar will go up,” said a forex dealer.

Confederation of Indian Industry (CII) said past experience had shown that political instability, uncertainty and flux adversely affected sentiment, confidence, economic activities and economic growth of the country. CII President Rajesh Shah said there was an immediate need to adopt the Finance Bill 1999 reflecting national consensus across all political parties to safeguard key economic factors such as investment climate, `feel-good’ factor and the ongoing process of capital expenditure by the government and its various agencies.

"Political parties will bring in enormous confidence by adopting the Finance Bill, thus ensuring stability of the economy and the economic policy because the union budget is the flagship event of country’s economic calendar,” Shah said in a statement.

The All India Association of Industries(AIAI) said the symptoms of an economic revival after the budget presentation may receive a setback following the current political uncertainty. "The present situation will also affect the domestic investment and various infrastructure projects as politics have taken over economics due to the uncertainties," AIAI president Vijay Kalantri said in a statement.

CII said passing of various bills including Insurance Regulatory Authority (IRA) Bill, Fema and Money Laundering Bill was important to take India into the new, emerging global business environment. "Parliamentary Standing Committee on Finance has already dealt with these economic legislations, reflecting political consensus. Therefore, early adoption of these laws would be very important," Shah said.

He expressed optimism that the political parties would put the interests of the nation and its economy before everything else at a time when sentiment, confidence, economic growth and job creation are the overriding needs for India.

AIAI warned that thepolitical uncertainty would further weaken the rupee, affect the capital market and lead to rise in inflation despite a bumper agriculture crop. “Political uncertainty would take its toll on the economy with international credit rating agencies reassessing rating, foreign fund managers becoming more cautious and domestic investors and entrepreneurs holding back fresh proposals,” said a leading businessman.

The fallout of the political turmoil would be harsh on the state of economy which was beginning to look up after the presentation of the budget by finance minister Yashwant Sinha in February. Although the budget might get the approval of Parliament, the euphoria it generated will evaporate fully in the near future. “Much would depend upon the developments in the next couple of days,” said a fund manager.

Finance Bill fate worries India Inc
MUMBAI: India Inc wants all political parties to arrive at a consensus over passage of the Finance Bill, 1999 by Parliament. Eicher group chairmanSubodh Bhargava said political parties should give "due consideration" to the Finance Bill.

According to Group Usha chairman Vinay Rai, the passage of Finance Bill 1999, irrespective of the political development, would send the right signals to the industry and foreign investors. "The Parliament should pass the Finance Bill as well as other important pending economic legislations to instill confidence in industry and people at large that all political parties do not want any uncertainty over the country’s economic scenario," he said.