UPA performance more than satisfying: ASSOCHAM

As 2007 comes to its closure, Indian Inc. rated the performance of UPA Government under Prime Minister, Dr Manmohan Singh "more than satisfying" in the last three and half years, particularly under compulsion of coalition politics, both on internal and external front, giving it 7 marks out of 10 and describing its Business Confidence Index as investment-friendly to fair extent.

The just conducted assessment carried out by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) on UPA Government's performance in the last three and half years is based on a random Opinion Poll in which nearly 400 CEOs and MDs of large, medium and small size industries participated. It concludes with 70% of these head honchos feeling that the Government's performance was good in terms of keeping average GDP growth at around 8.3%.

Exports registered a growth of 18-20% despite rupee appreciation and savings rates grew at over 31%, further felt the 70% lot of the CEOs. According to them, inflation however remained a prime concern for the Government in the past three and half years which despite its best effort, stayed at 6% and caused a great deal of criticism for the UPA Government, said ASSOCHAM President Venugopal N. Dhoot.

35% of the CEOs and MDs have rated the current government performance, describing it just an average, arguing that neither employment increased substantially nor reforms in labour market were introduced and therefore, the growth rate cannot be termed as `inclusive’.

85% of CEOs, however, felt that Dr. Singh did all humanly possible ever since he took over as the Prime Minister on almost all front under coercion of coalition politics and particularly in maintaining an excellent foreign policy with equally balanced approach towards economies of scale and those of developing countries. FTA’s performance and foreign exchange reserves were appreciated by 85% of CEOs.

Nearly 30% of CEOs and MDs have hailed the leadership of Dr. Manmohan Singh in handling the nuclear issue with United States of America without any offensive and belligerent approach to some of its nuclear partners, saying that such a delicate issue was handled with much more maturity and statesmanship and at times, the government faced embarrassment on this issue because of domestic political reason.

Nearly 70% CEOs said that Dr. Singh’s leadership deserves only 7 marks out of 10 because prices of agricultural commodities showed a sharp rise in the 3 and half years of the UPA rule primarily due to stagnating production and rising demand. Commodities prices like pulses, wheat and edible oil have seen a jump of 40-100% thereby contributing to overall inflation.

Majority of the CEOs appreciated the allocation of UPA government towards education. Compared to 2001-02, financial outlays for the Sarva Shiksha Abhiyan increased fifteen-fold from Rs6.65bn and stood at Rs106.71bn in 2007-08.

The CEOs also appreciated the launch of Bharat Nirman programme of UPA government with a massive public-private partnership that envisages providing infrastructural amenities with the collaboration of private sector. While the performance of Dr. Singh government in the power sector has been dismal – just about 50% of the targeted 41,000 MW was added in the 10th plan period – it can take credit for paying open the nuclear door for India.

Over 80% of the CEOs complimented the UPA government for taking the Sensex to all time high heights of 20,000 marks, the credit for which goes to the Finance Minister and the UPA government in particular as the capital market maintained almost a good pace in the last 3 and half years and the pace accelerated substantially in latter part of 2007.

As many as 90% of the industry leaders agreed that the buoyancy in the steel, cement, banking, metals, construction material is a result of the boost given to the infrastructure and housing sectors apart from a global firmness in prices.

With big time investments taking off in the construction of roads, bridges , ports and railway, many of the infrastructure companies like Larsen and Toubro and Hindustan Construction have been re-rated among the investment bankers and the stock market. The performance of railways have also been appreciated by 95% of CEOs, complimenting the Rail Minister, Mr. Lalu Prasad for railway’s turnaround.

The corporate results show that despite certain sectoral glitches, the companies have been maintaining a net profit growth ranging between 15 and 20%. Corporate firms in most of the sectors, be it steel , cement, fast moving consumer goods, real estate, manufacturing, retailing, banking , infrastructure finance, hospitality or aviation have remained beneficiaries of the booming conditions in the demand-driven markets. In fact, in certain sectors like aviation, the Indian picture is quite different from the rest of the world.

However, there are challenges as well and the government along with the Reserve Bank of India have to remain extremely cautious about some of the global developments which could have a damaging impact on the Indian economy which is well integrated and not free from the international economic architecture.