Political factors to weigh more on economy: Assocham


India Inc will have to factor in political realities weighing on economic decisions of the government, including in the forthcoming budget, as several major states are going to polls in 2018, Assocham said on Sunday.

“In the run-up to the 2019 Lok Sabha elections, states including Rajasthan, Madhya Pradesh, Chhattisgarh and Karnataka are due for polls in 2018. Inevitably, it would be the popular voters’ sentiment that would be factored by the Centre and the state governments in their policies.

“Any tough reforms, like flexibilities in labour laws, may not go well with the popular sentiment and thus, India Inc’s expectations on this front should be muted,” said the chamber.

However, it observed that an important take away from the current political-economic environment is that the Goods and Services Tax is expected to be further streamlined and rates further rationalised on the lower side.

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“The GST had not gone well with the traders, the major political force for the political parties and the issue remained in focus during Gujarat elections. Besides, the SMEs would also get a boost, starting from the Budget proposals.

“Their role in creating employment in a shorter span of time is being recognised and the job creation would remain a big concern for the government in the foreground to 2019 general elections,” the industry body said.

Going forward, major attention is likely to be given to the rural landscape with several initiatives like support to farmers, rural and agriculture infrastructure.

“Thus, Corporate India directly related to the farm economy should stand to gain. The tone would be set in the coming Budget,” it said.