NEW DELHI, July 7, 2006 (AFP) – India’s move to freeze its privatisation programme is a bad signal for reforms and highlights the uphill battle Prime Minister Manmohan Singh faces to liberalise the economy, analysts said Friday. Only two weeks after announcing the government would revive asset sales, Singh said Thursday he was putting “on hold” stake sales in state firms because of “representations from some of the (coalition) constituents and allies.”
The flip-flop followed a threat by a crucial coalition partner to withdraw from the government over the sell-off plans and strident opposition from communist allies amid fears of worker lay-offs.
“There’s no unified view within the government on economic reforms,” said political scientist Mahesh Rangarajan.
“Governments in India usually have a two-and-a-half year opportunity to implement major changes before getting hesitant (with the prospect of new elections). Well, we’re nearing that mark now,” Rangarajan added.
Economists said the asset sales, whose proceeds were intended to fund poverty alleviation, were not a key part of the government’s reforms programme and would not affect growth prospects for this financial year.
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