Newspaper article The Christian Science Monitor

In South Asia, Feuding Pols Ignore Business Pleas for Stability

Newspaper article The Christian Science Monitor

In South Asia, Feuding Pols Ignore Business Pleas for Stability

Article excerpt

When East Asia's tiger economies took a nose dive earlier this year, it was the vindication many Indian economists and policymakers had long been waiting for.

In the tortoise-and-hare race for growth and prosperity, slow-and-steady India looked as if it had edged ahead of its rivals.

India's credentials rested on its firm commitment to economic liberalization initiated by the Congress Party government in 1991 and carried on by the United Front after it came to power last year. Despite being a loose coalition that included free marketeers and hard-line leftists, the United Front earned praise for its business-friendly budget and its all-out efforts to woo foreign and domestic investment. Not surprisingly, when Congress used its size and strength in Parliament to force the fall of the 17-month-old government last week, the business community was among the most vocal critics. The same is true in neighboring Pakistan, where business leaders are calling for reason to prevail in a two-month tussle between the prime minister, the president, and the judiciary that has paralyzed the government. Overburdened with poverty, crippled by a lack of infrastructure, and tarred with the brush of bureaucratic inertia, the last thing the economies of South Asia need is another political crisis to divert attention from pressing economic priorities. But from Sri Lanka in the south to Nepal in the north, the governments of the region are finding that instability and investor confidence don't mix no matter how large their untapped consumer markets might be. "We are losing the image of a potential economy and will meet the same fate as other Asian countries if we do not get the requisite direction and government to get back on the track of economic growth," says Ranjan Nanda, managing director of one of India's largest industrial conglomerates, Escorts Ltd. More than just the collapse of another South Asia government, the fall of the United Front could put on hold the winter session of Parliament, which was expected to pass crucial reform bills in areas such as taxation, company law, insurance, power, and mining. Instead, India's recession, with its sluggish industrial and export growth, may deepen if the country's currency keeps plummeting and the stock market continues its roller-coaster ride. …

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