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Political crisis may force Rao to modify radical economic reform
NEW DELHI, Dec 25: Political considerations may force Prime Minister P V Narasimha Rao to modify India's radical economic reforms to suit his new-found leftists allies, economists and businessmen said on Thursday, says Reuter,
But they said the overall programme would go ahead and the modifications may only mean delay of new policies which Rao already has difficulties implementing.
"There's going to be a polar isatton on the political front," said S L Rao, Director General of the National Council for Applied Economic Research
(NCAER1.
"One does not know at what price the left would support the government's economic reforms. But the communists arc not asking to go back lo thb old days, possibly because of the collapse of communism elsewhere. So, the macro-economic adjustment is not questioned"
Rao said India had come a long way through reforms which abolished most industrial licensing, liberalised foreign investment and made the rupee partially convertible.
With Gross Domestic Product growth projected at four per cent in the 1992-93
financial year which runs from April to March against 2.5 per cent In the previous year, there was reason to be positive and buoyant about the economy. he said.
The coming budget will say a lot of things, though it may not be as dramatic as the previous one," Rao said
Narasimha Rao, locked In a bitter battle with Ihe Opposition Bharatiya Janata Party (BJP) tn the wake of widespread violence triggered by the razing of a mosque, survived a no-confidence motion this week with the* help of communist and leftist groups.
The BJP said Rao's alliance
with the left would hurt re form.
"Political compulsions are more Important than economic ones." said Jagdish Shctllgar. an economist with the Hindu nationalist BJP which seeks to force- Rao into Carly elections.
"The government may have to choose between IMF conditionalities and leftist demands. Shcttigar said, referring to the seven billion dollar to nine billton dollar loan the ' government I* seeking from the International Monetary Fund to help Implement its reforms.