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Post-trust vote: How will India Inc react?
Published on Tue, Jul 22, 2008 at 09:00 , Updated at Tue, Jul 22, 2008 at 16:19
Source : CNBC-TV18
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It is the final 24-hour countdown to the confidence vote, which will decide the fate of the UPA government. The confidence motion brought by Prime Minister Manmohan Singh is in the middle of a furious debate in Parliament. The government claims the support of 269 MPs while the Opposition says that they have 268 members with them. The 3 undecided MPs now hold the key to the government's survival. Mamata Banerjee has finally ended speculation and announced that she will abstain from the trust vote. Network18 learns that 10 MPs from the NDA could abstain and save the day for the UPA. We learn that six of those could come from the BJP.
India Inc speaks
“It can put through reforms which are considered electorally friendly and which are likely to be supported by the SP. So, I have heard that SP does not wish to have liberalization of foreign direct investment in retail. I presume something like that would not go through but many other changes in insurance and telecom could go through as many of them are considered electorally friendly.”
Godrej said, “I'm taking it in my stride. There is a political issue. It will get resolved by tomorrow night and one way or the other, we will know whether we are likely to have an election around December or so or will it be around April. So, it is not a big difference between the two scenarios. I feel of course, if the present government wins the trust vote it will be good for the stability of the economy. But, it is not going to make a very big difference if it's otherwise.”
According to Godrej, if the UPA wins the trust vote, its hands will be strengthened. “The nuclear deal is likely go through, which will be good for the future of the country. And, I think some reform agenda could be executed before the election. I think generally that will build confidence. I also feel that one of the major negatives, currently, of the high inflation will probably be contained by March. So, elections at that time will be favourable for the country,” he added.
“We are always unhappy when government becomes unstable because it is not good for anybody not just for corporate India but for the whole country. We need a stable government, there have been elections after every five years, UPA must deliver and if they do not deliver they must probably brought back. I think the thing that is bothering me and many of us is that instead of a debate on whether India should go nuclear or not. In the current scenario it has all become a game of should Congress survive or should UPA survive?” Gopinath said.
Gopinath said, “I have consulted some of the eminent scientists and it seems that it is good for the country without losing our sovereignty and our rights to the defense strategy that we have. But I think the worrying factor is that nobody is now debating the nuclear debate. Of course some debate is going on in the parliament but it is all about toppling the government rather than debating the issue.”
Gopinath is concerned on the nuclear deal. “I think I am more concerned with the nuclear dear itself. We can also debate the fact as to what are the implications if the UPA wins the vote and does not win the vote. But I think my whole worry is that if there is a debate in the US, it is a debate on the issue and if it is defeated, it does not get carried. The government does not fall. Many times the president puts the vote, the vote is defeated, they do not go through with that. I think from that point of view, it is worrying me that the whole thing is now shifted to toppling the government. But of course if UPA wins I think it will last the balanced eight-ten months, which is as it should be and I think it is also good for India’s Energy Security because today there is no power, farmers are getting free power from all the politicians but there is no power in the villages.” 85x85.jpg) BVR Subbu, Former President, Hyundai, said, "In the near-term there is going to be lot of uncertainty which is not good for business at any stage, at any time, in any place." Subbu said that he would like to wait and watch and believes that as a citizen of this country, next three months' timeline is not something that is conducive to any great sense.
Impact on oil companies
If the UPA falls, there will be the Petroleum Minister. But he will also be assisted by a new Secretary RS Pandey will take charge from August 1. So, there will be a complete new top leadership at the Petroleum Ministry if the UPA government falls. There is the case of the subsidiary sharing formula as well as the pricing policy. Now the UPA had constituted a high power committee under BK Chaturvedi and it is supposed to submit its report by August. But if the UPA government falls, it will interesting to see if it will be implemented. Trust vote impact on telecom
3G guidelines have already been delayed on account of the trust vote. They were to be issued at the end of the June and it has still not happened. If the government were to fall, the entire 3G auction process could be delayed by 6-8 months. That is certainly not good news for the entire telecom industry, both for existing operators and new operators. The other big negative impact of the government falling is on vacation of spectrum from defense. Currently, a mechanism has been put in place. The National Security Advisor, MK Narayanan, is chairing a sub-committee that is looking into vacation of spectrum from Defense. Again, that entire process could get derailed if the government were to fall tomorrow. The two policies that could have somewhat marginal positive impact on the industry is on the spectrum usage charges. DoT is working on a move to increase spectrum usage charges across the board. That is something that is not very good for the entire sector for most operators, whether it is GSM or CDMA. If the government were to fall tomorrow, that process could not happen so early. The move to hike spectrum usage charges may not be there. The other move is the DoT working on the imposition for one-time spectrum acquisition charge for spectrum allotments beyond 6.2 megahertz. It is a move that will be negative for large GSM players. If the government were to fall, then that move may not happen. So, to that extent, it will be positive for the existing large GSM players. So, net-net the telecom sector and India Inc will have its eyes glued to the trust vote tomorrow.
Impact on banking companies:
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Adi Godrej
Hemant Luthra
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According to Nupur Acharya, CNBC-TV18, if the UPA survives, there will be no impact on the Pension Reforms Bill as both, the BJP and the Congress are supporting the bill. As regards, the SBI Amendment Act, the Government’s stake in the State Bank of India will fall to 51%. As a result, SBI will get headroom for more equity. With respect to the Banking Regulation Act, the 10% cap on voting rights for any entity could go. Messages on Politics
Other comments
Ramki, I dont have the photograph, the photographer has it.... let me see if i can get a copy....
in Politics - radhika_nandlal at 11-Oct-08 08:25
People who have very long term insurance plan -maturity on 100 age not to worry!!!!! My friend told me this is the...
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