India crisis threatens growth say firms
New Delhi, June 13, 2011
Three quarters of major companies in India are unhappy with Prime Minister Manmohan Singh's government, saying that a governance crisis ranging from corruption scams to policy limbo will hit economic growth and their investment plans.
The survey of 75 leading companies by the Economic Times newspaper and Federation of Indian Industry and Chambers of Commerce (FICCI) is the latest sign of corporate unease with the Congress party-led government in a country where grievances from companies are rarely aired in public.
The survey, published on Monday, said 80 percent of companies believed that decision-making by the government had slowed and 72 percent feared investment plans would be hit.
"The prevailing negative sentiment among domestic investors will have a bearing on the perception of foreign investors," the Economic Times quoted Harsh Mariwala, president of FICCI, as saying.
A separate survey by the Economic Times and Synovate of 43 leading company executive, also published on Monday, showed 63 percent believed that the governance crisis would likely hit India's growth.
A sense of paralysis in the government - focused on a telecoms scandal that may have cost up to $39 billion in lost revenue - has led to growing unease amid companies.
That scandal has seen the jailing of one minister and several other executives. It has shaken India's business elite with billionaires Anil Ambani and Prashant Ruia both questioned by police, something unheard of in India in recent times.
Parliament has been virtually shut down during the last three sessions, with the main opposition Bharatiya Janata Party paralysing government attempts at legislative business. Few reform bills have been passed, including one to make it easier for industry to acquire land.
In January, a group of 14 public figures from industrialists to former central bank governors warned in an open letter that corruption and bad governance threatened India's growth story. - Reuters