Election result fallout: Policy paralysis may be here to stay

NEW DELHI: Foreign retailers were watching election results in UP as closely as most Indians were. After all they have been holding on to millions of dollars that they hoped to pump into the country to open multi-brand stores and back-end infrastructure.

But the results have been a huge dampener for them as the fate of the freeze on the Cabinet decision allowing 51% foreign direct investment in multi-brand retail, to a large extent, depended on what happens in the assembly polls. The Congress had hoped to notify the rules after the polls. But with voters giving thumbs down to Rahul Gandhi’s idea of change, which included getting farmers in Farrukhabad better value for their potatoes, officials reckon that it will be status quo for the moment.

Policy paralysis, which has been an oft-repeated criticism of UPA-II , seems to be here to stay, say officials involved with economic policymaking.

“Consensus would suggest the Congress will get more cautious; that is, effectively hand out more sops resulting in further fiscal slippages and move further away from reform – a mix that will be negative for the macro (economy)... we think the odds favour more defensive rather than offensive economic management from the government from here,” Citibank told investors.

Even allowing foreign airlines to acquire stake in Indian carriers may not come anytime soon.