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The Indian political landscape is again veering towards a phase of intense uncertainty. With the Left finally deciding to call off its support to the Manmohan Singh-led government, the fate of the government is uncertain as it scrambles to garner support from 272 members.

India Inc feels elections are not likely for the next few months. “It is a wait-and-watch situation. The corporate sector will hardly face any impact following the development,” thinks DD Rathi, CFO and whole time director, Grasim Industries. The company is a significant player in the cement industry and the government’s earlier proposal on an infrastructure outlay of a mammoth $350 billion is key to companies in this sector.

In the past, a political crisis of this kind was often greeted with apprehension since a slowdown in the reforms process was feared. That thinking has changed. Videocon group chairman Venugopal Dhoot opines that the visit of the Prime Minister to the G8 summit is a positive step. “I really think this will increase the long-term brand equity for India. The way I see it, these countries will continue to invest in India and to that extent, things will not change,” he adds.


To most observers, India’s long-term story is intact and the level of political uncertainty is still not a big cause for concern. Subir Raha, vice-chairman of the Hinduja Group and former chairman of ONGC says the UPA government came to power on the promise of reforms.

“That is stalled now. The UPA government’s term comes to an end in less than a year and no further reforms can be expected till then,” he warns. Mr Raha also maintains that only ad-hoc decisions will be taken till then. “The growth momentum will be stalled because of the international and domestic crisis,” he adds.

Oil and gas can be a tricky sector going ahead. This is in the light of the Samajwadi Party (SP) agreeing to support the UPA government. SP’s general secretary Amar Singh is known to be close to Anil Ambani while his antipathy for Anil’s brother Mukesh is well-known. The two brothers have been at loggerheads over the supply of gas from Mukesh’s Reliance Industries (RIL) for Anil’s power projects.

While the matter is in court, some say that in a scenario where the SP supports the UPA government, Anil may stand to gain. Mr Singh has been quite vocal about his views on issues related to oil and gas though he clarified on Tuesday that these are merely suggestions. There are political clouds over the issue of windfall gains to crude oil producers as prices over the past year have moved from levels of $70-80 to over $140.

“The Panna Mukta Tapti (PMT) venture will have windfall gain, because of increase in crude oil prices,” says Mr Raha. This is a three-way joint venture between Reliance, British Gas and ONGC. There is talk of windfall tax, which the Samajwadi Party favours.

Overall, India Inc believes there will be no major impact but things may not move quickly till election time. “Political uncertainty does not affect business. We have gone through phases like these before,” Future Group’s CEO Kishore Biyani said. Politics or no politics, it is business as usual for India Inc.