Amid an euphoria that government would now push ahead economic reforms after winning the trust vote in Parliament and parting ways with Left parties, two of the most influential global financial majors, Goldman Sachs and Citigroup have expressed their doubts on this front.
In a report published after Prime Minister Manmohan Singh-led government won the trust vote earlier this week, Goldman Sachs noted that India would now have an opportunity to pursue stalled reforms, but the administration would have to deal with several difficulties in carrying out the process.
“… if it is to introduce reforms successfully, the government will have to deal with several difficulties,” analysts at Goldman Sachs said.
In a separate report, global financial services major Citigroup said that it remains to be seen whether UPA would be able to put reforms on the fast track or not.
“But whether it will be able to put reforms on the fast track and clear all the pending legislation is not a given as especially in politics, there is no free lunch,” Citigroup economist Rohini Malkani said.
Outlining five factors that could “impede its ability to enact reforms successfully,” Goldman Sachs said that the little time available for the government to complete its full term and need to placate and meet demand of allies who supported the regime in the next General Elections and the populism that may entail.
Fourth, the acrimonious discussions that took place between UPA and the opposition, especially the Bharatiya Janata Party, could lead to difficulties in passage of important bills.