New Delhi, July 23: India's drive to sell state firms, a success story in its decade-old economic reforms, is set to lose pace ahead of key state and national elections. Last week Prime Minister Atal Behari Vajpayee bowed to political pressure and reversed plans for a $1 billion sale of 61 percent of National Aluminium Co (Nalco), the country's second largest aluminium maker. Vajpayee's Bharatiya Janata Party (BJP), which met over the weekend to plan strategy for state polls later this year and national elections in 2004, said it would not go back on its overall privatisation strategy.
But economists doubt there will be more privatisations in the face of stiff union and political opposition, particularly as a battle looms over the sale of state stakes in two big oil firms.
"I think the Prime Minister's Nalco announcement fairly gives an indication where it stands. I would think that big-ticket change of ownership is in limbo," said Subir Gokarn, chief economist at domestic credit rating agency Crisil.
Bureau Report