India's economic liberalisation is unstoppable, according to analysts, dismissing fears that reforms might be stalled by an incoming communist-backed Congress government led by Sonia Gandhi.
The reform drive launched in 1991 by a Congress administration under the stewardship of then finance minister Manmohan Singh - now tipped to take back his old job - had gathered too much momentum to be derailed, they said.
"Economic reforms are irreversible. Nobody can stop reforms in a country that is one of the world's fastest growing economies," said Y.M. Deosthalee, chief financial officer at engineering giant Larsen and Toubro.
"No government can afford to stop them, as they have been fuelling economic growth of an average six percent annually," he added.
Indian markets plunged over six percent Friday, their biggest one-day fall in four years, on investor worries that key economic reforms such as privatisation and deficit cuts would be put on the backburner.
The nosedive, which wiped 23 billion dollars off share values, was spurred by market alarm about the future of reforms that economists said were key to keeping Asia's third-largest economy on the fast track. India's economy expanded 10.4 percent in the three months to December.
The dive came after Congress, led by Italian-born Gandhi, emerged Thursday as the largest party but which will have to depend on a mixed bag of communist, socialist and regional groups for a majority to govern.
Economists said it was important for investors to keep their nerve following the surprise exit of Prime Minister Atal Behari Vajpayee's market-friendly government that aggressively pursued privatisation.
"I don't see any problem in the long term as the 'India roaring' story continues despite the leftists," said Alok Vajpeyi, president at DSP Merrill Lynch Fund Managers. "I'm not changing my outlook... It's bullish in the medium-to-long term."
Congress economic spokesman Jairam Ramesh also sought to allay fears about the pace of reform. "These fears of policy reversals are completely unfounded," he told NDTV television. "There will be no dramatic U-turns in policy.
"A Congress-left government will be pro-growth, pro-investment... but mindful (of the) needs of the common man," he said. "A strong public sector and private sector can co-exist."
At the same time he reiterated Congress' stand that there would be no sale of profit-making public sector companies.
Before the election, in which rural voters angered about being left out of India's economic boom swept out Vajpayee's coalition, Congress had promised to continue reforms but to give them a "human face".
Analysts said the market plunge was a "knee-jerk" reaction to the leftist backing needed for a Congress government to retain power.
"The leftists could influence the reforms process no doubt, but if it becomes a hurdle to growth, the main Congress party would not accept it. The likely finance minister, Manmohan Singh, will prevail or convince the leftists of need for reforms," Deosthalee said.
Singh, hailed as the man who set India on the path to economic reform 13 years ago, is seen by the markets as a safe pair of hands. He is tipped to return to the finance ministry he headed in 1991 with P. Chidambaram - the trade minister at the time, who later took Singh's reforms a step further as finance minister - also expected to return as trade minister.
But analysts said the new government was likely to go slow in area such as changing employment laws that would make it easier to hire and fire and added that reforms in agriculture and social sectors would pick up.
It might also have to seek to raise indirect taxes to counter the loss of privatisation revenues in order to keep a lid on the fiscal deficit, an economist at a foreign brokerage said.
Singh echoed her words, saying the party intended to pursue policies that promoted rapid social and economic development growth of savings and investments and create a favourable climate for enterprise.
"I'm confident we will be able to overcome these small problems (of working with communists). There will be no difficulty in smoothly running the central government."
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