The Congress led coalition government has returned to power in India after the successful conclusion of the world's largest democratic elections.
With the chief architect of Indian economic reforms, Prime Minister Manmohan Singh back in the driving seat, everyone from business barons and CEO's to traders and investors have their wish lists ready. The equity markets already gave a euphoric welcome to the Congress government by soaring to a record single day gain on the announcement of the election results.
On a more conservative note, once the initial euphoria tapers off the government will have to get to the grind and deliver. Unfinished projects - work which could not be completed due to the compulsions and compromises of coalition politics - now ranks high on the to do list! Reforms in politically sensitive sectors such as insurance, banking, pension, labour laws and agriculture are expected to be the frontrunners on the new government's agenda.
On the parliamentary front important legislation such as the Insurance Amendment Bill, the Banking Regulation Amendment Bill, the Forward Contract Regulation Amendment Bill, the new Companies Bill that have all been long pending shall hopefully now see the light of day. It will be expected that these pending Bills and other laws that deal with important issues are addressed in a way as to create robust regulatory frameworks.
Regulatory uncertainty, policy impasse and ambiguity in several sectors need to be addressed as a priority and over ridden in no uncertain terms. Other pending items include, finalisation of the framework for goods and services tax, reforms in direct tax laws and an enabling framework for data protection under the amended information technology laws. In the telecom sector the government will have to restart the auction process for issuing "third generation" or 3G licenses and also address disputes relating to spectrum allocation. Decisive action will be necessary towards speedier implementation of infrastructure projects. Investors shall be closely looking at regulators like the Competition Commission of India that became operational recently and require the necessary support and guidance from the government to function effectively.
Clear majority may come as a sigh of relief but the adverse global economic climate and the impact of the slowdown on the Indian economy will make the start of the new innings for the government more challenging. It was Dr Manmohan Singh who led the historic reforms in the year 1991. Almost two decades hence when the promising Indian economy is ready for another leap forward, will the Prime Minister and his team be able to deliver? Will the much awaited "second generation reforms" become a reality? As of now the signals emerging from New Delhi look positive; for the performance of the government however, the jury, as they say, is still out.
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