With the Manmohan Singh government winning the trust vote in Parliament, the business community generally feels relieved. Corporate leaders, bankers and financial market professionals believe that now with little interference from Left parties, the government?s reforms agenda will receive a boost for its remaining term, and the flow of foreign investment will increase.

Stock market participants expect the relief rally to be sustained in the short to medium term as the political picture became clearer. Share prices on Tuesday ended in positive terrain for the fourth day in row. Most market players that FE spoke with were unanimous that the government?s success in trust vote would not only help sustain the rally but also clear the way for foreign investors to re-enter India.

Venugopal Dhoot, chairman of Videocon Industries, agrees, ?There will be growth in US investments in India. India will also get very cheap power.? There might not be much time left for the ruling UPA to push reforms, but it is likely to do

it aggressively.

Says Deepak Ghaisas, CEO-India operations and CFO of i-flex Solutions, ?We can now expect the government to function better. In the remaining six months, the UPA government can take decisions that they were unable to due to interference from the Left.? Echoes Harsh Mariwala, chairman of Marico Ltd, ?It?s a good development. There will be political stability in India.?

Financial professionals and bankers also think reforms in the financial sector will now take a front seat. Romesh Sobti, managing director & CEO of IndusInd Bank, said the financial sector will get a boost as the Prime Minister had explicitly indicated he will implement reforms in the pension and insurance sectors as quickly as possible. Says KJ Rao, CFO, Ceat Ltd, ?We expect the pending reforms in the banking and insurance sector, which were held back, to go through now. There is no cause for worry.?

Apex industry body Ficci said that it is now looking forward to a wave of reforms, some of which were held back in the past due to the ideological concerns of the Left. “We expect that in the next three months, some major Bills pending in Parliament will also be pushed through, including the Pensions Bill and the Banking Reforms Bill. Rajeev Chandrasekhar, MP and president, Ficci, will be proposing to the Prime Minister on Wednesday a ten-point agenda to move the reforms effort forward in a major way,” a Ficci statement said.

“Once these flurry of reforms are undertaken, the confidence level, which had been dropping over the last three quarters in the business confidence survey of Ficci, will bottom out and will put the economy back onto a growth trajectory,” said Chandrasekhar.

Echoing the same sentiment, Assocham described the win a ?vote to the future of India and pragmatic policies pursued by the UPA government for building a strong India?. Assocham president Sajjan Jindal said, “This goes to prove that a majority of people’s representatives are all out to support the civil nuclear agreement for meeting India’s energy needs.?

CII director-general Chandrajit Banerjee also termed the victory as a welcome political development. “It ends all political uncertainties and the new development will usher in growth momentum for the country’s economy, ” Banerjee told FE.

According to an HSBC Asian Economics Team estimate, the main reform is likely to involve the insurance sector: raising FDI from the current cap of 26% to 49%. “Finance minister P Chidambaram had proposed this FDI hike, but in the light of the Left?s opposition to his proposal, had to backtrack. But once the cap is relaxed, a lot more foreign money is expected to flow in and expand the insurance sector,” the report said.

The foreign fund inflow is expected to boost the equity market. Shankar Sharma, vice-chairman & joint managing director, First Global, said, “I see the Sensex rallying another 1,000-2,000 points. The market mood is buoyant in the wake of the UPA winning the vote of confidence and also on the back of falling commodity prices and slowdown in inflation growth.”

Raamdeo Agarwal, joint managing director, Motilal Oswal Securities, said, “This development will be more closely watched by overseas investors than their domestic counterparts. The positive outcome of the trust vote might see foreign investors once again flocking to Indian markets. With crude oil prices showing some signs of easing, we may see an immediate rally, which is likely to sustain in the short to medium term.?

The chairman & managing director of a public sector bank, requesting anonymity, said that any stability is good for the business growth of a country. He also hoped that with the Left opting out of the UPA, the government could kick off a number of reforms as it has the elbow room to form the next government when its present term ends after six months.

However, the banker added that much could not be expected on the reforms front within such a short period. Paresh Sukthankar, executive director at HDFC Bank, said new reforms in the financial sector might not be implemented in the immediate future since the government?s urgent priority would be to combat inflation.

Ashank Desai, founder & non-executive director, Mastek, said, “The nuclear deal is good for the country. There is no need for elections in between. In the current scenario, we also have to see whether the government will be able to take much more bolder decisions regarding liberalisation.”

The success of the trust vote also gives the current government some time to get organised before a general election in May 2009. But this, political commentators feel, will increase the chances for additional populist and potentially expensive pre-election economic measures. “These could, for example, include a rollback of the petroleum price hike initiated in June,” an HSBC estimate adds. Moreover, the government still runs the risk of facing further no confidence motions and uncertainty if the UPA is unable to keep its diverse flock together, it predicts.

Sudeep Bandyopadhyay, director & CEO, Reliance Money, said, “Now is the time for the government to show that it can take some concrete measures. It is likely that the much-awaited reforms in the insurance, pension and banking sectors would see the light of day in the remaining tenure of the present government. But unless the government takes some concrete progressive action, foreign investors would still wait before re-entering the Indian market.”

Ajay Bagga, CEO, Lotus AMC, said, “Markets have more or less factored in the outcome of this political development. So, we won’t see a major run-up. The government would be able to push some vital reforms. I feel that the fundamentals would still have an upper hand in determining the market trend. Concerns on inflation, interest rates and rising crude prices still persist and the political development won’t be a major attractive factor for foreign investors.”