SME Times News Bureau | 11 May, 2009
An alliance led by the Bhartiya Janata Party (BJP) is more likely to be "pro-business" than a government with the Congress party at its helm, a leading global consultancy said on Monday.

"Party manifestos and past records suggest that a UPA (United Progressive Alliance)- led alliance may focus on rural and social sectors, while a BJP-led government may concentrate on infrastructure and pro-business policies," said a Goldman Sachs report.

The previous National Democratic Alliance (NDA) government was led by the BJP under the prime ministership of Atal Bihari Vajpayee.

A UPA-led government is likely to lay greater emphasis on rural and social sectors, especially the National Rural Employment Guarantee Act, and could implement the Goods and Services Tax (GST), the report said.

"This suggests to us that if the UPA-Left combine comes in, it would be beneficial for a rural theme - consumer goods, autos, and telecom."

However, Goldman Sachs said, "If the NDA were to form the next government, we expect beneficial policies for infrastructure, support for exports, and possible privatisation, thereby positively impacting state-owned firms".

The chance of the Third Front forming the next government looks bleak, the report said, and concluded that there is going to be "considerable uncertainty" in the near-term.

The report is also sceptical about the ability of the next government to take tough decisions.

"Bold decision making may be stymied due to the lack of a significant majority for the eventual government," said the report. "Our view is that the election outcome is seen as unstable due to a fractured mandate. Such a result would be negative for policy-making and for markets in the short-term."

It went on to add: "If the UPA forms the next government with the support of the Left, then it is likely that there will be few changes to the policies adopted over the past five years."

On the other hand, Goldman Sachs said, "If the NDA were to form the next government, we expect beneficial policies for infrastructure, support for exports, and possible privatisation, thereby positively impacting state-owned firms".