Mauritius Watches Indian Political Developments With Interest

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

21 May 2004

Developments in the Indian political arena have been watched with much interest and not a little disquiet by investors throughout the region, in particular those investing via Mauritius, which has traditionally had a close relationship with its larger neighbour.

The recently announced appointment of celebrated economist, Manmohan Singh to the position of Prime Minister following Sonia Ghandi's refusal to assume the role has reassured some observers, although the fact that the Congress Party is dependent on support from the Communist Party has caused some disquiet with regard to the continuation of liberalisation and privatisation in India.

However, speaking following Mr Singh's appointment by President A.P.J. Abdul Kalam, Mauritian Industry, Financial Services and Corporate Affairs Minister, Sushil Khushiram attempted to reassure investors, suggesting that although it is possible that the economic liberalisation of India could be slowed as a result of the new order, it is highly unlikely that the government will abandon it altogether.

He went on to suggest that in his opinion, the new government has three options in terms of economic policy - to carry on in the same direction as its predecessor, to slow the progress of liberalisation, or to introduce radically different policies.

According to reports, the consensus amongst offshore professionals and political observers appears to be that it is unlikely that Mr Singh (who as Finance Minister in 1991 launched the liberalisation initiative in order to avert a financial collapse), will attempt to derail the process, despite the fact that his stated top priority is to "tackle rural poverty".

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