Investors concerned that India anti-graft party policies can slow economy

January 17, 2014 Leave a comment

Investors concerned that India anti-graft party policies can slow economy

By Madeeha Mujawar
POSTED: 16 Jan 2014 23:56
The emergence of a new political party in India – the Aam Aadmi (AAP), or Common Man’s Party – is cause for some concern among investors. Its socially popular policies, they said, could hasten the country’s economic slowdown.

MUMBAI: The emergence of a new political party in India – the Aam Aadmi (AAP), or Common Man’s Party – is cause for some concern among investors. Its socially popular policies, they said, could hasten the country’s economic slowdown.The expectation that a change of government this year will accelerate economic reform has been dented by the emergence of the AAP and its unclear policy stance.

George Matthew, India’s head at Espirito Santo Investment Bank, said: “AAP will have to spell out its economic agenda very clearly. People today don’t know what AAP stands for.”

After forming a government in metropolitan Delhi, AAP cut power tariffs, adding to the woes of already burdened power distribution companies. This week it opposed foreign direct investment in multi-brand retailing.

Such moves may be replicated in other states amidst electoral competition that could drain the country’s finances.

Many prominent names that joined the AAP too have expressed concern that some AAP initiatives appear short-sighted.

G R Gopinath, AAP leader and founder of Air Deccan Airline, said: “We need corruption-free India but we also need corruption-free, economically-strong India. They must not do anything in haste. Rather they should take the best of all the parties.”

Even so, the stockbroking community said India still has comparative economic advantage over slower-growing western economies.

Sudip Bandyopadhyay, president of Destimoney Securities, said: “Domestic market will continue to attract foreign investment predominantly because of the fact that we still have 5 percent plus growth in India and that’s fabulous growth considering the foreign investor who is coming from an economy which is growing at 1, 2 percent.”

While lack of clarity on policy issues is a cause of concern, many feel it is too early to judge the party for its agenda for national elections. So far their main focus is eliminating corruption and bringing in transparency and accountability.

The party is soon expected to declare its economic road map.

Filed under Macro Trends

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