Merrill Lynch flays govt policies

In the event this government falls, it said, we would lower our GDP growth forecast to 4.5 per cent, based on a three per cent industrial growth. 8220;Given the problems faced by the economy, a holding government is not likely to take strong policy initiatives,8221; it said.

It said the quick reversal of the import tariff hike from 8 per cent to 4 per cent shows that the government appears to lack direction and coordination. Similarly, itsays the roll back of urea price hike indicates the government8217;s inability to push through strategic reforms.

8220;A final rollback exhibited a lack of coordination between the various departments of the government. The increase in excise duty on petroleum was passed on as a Rs 4 per liter on the day following the budget. Later the finance ministry clarified and reversed the price hike.8221;

8220;All the reversals have resulted in a lack of business confidence. Though the finance minister estimates that the fiscal deficit will be within his defined target,8221; it said.