14 May 2004	Friday	23 Rabi-ul-Awwal 1425

NEW DELHI, May 13: India's economic reforms may slow after the opposition Congress party's shock election win but there's no reason for investors to hit the panic button, analysts said Thursday.

Defying opinion polls, Congress scored an upset victory over the ruling Bharatiya Janata Party (BJP) alliance whose pro-business agenda made it a favourite with international and domestic financial markets.

But economists note it was Congress which began the drive to open up India's economy to the world when in power in 1991 and its ranks include the architect of liberalisation, Manmohan Singh, tipped as a likely finance minister.

"It (the outcome) does not spell doom and despair (for investors)," said Paul Rawkins, analyst at Fitch international ratings agency in London. "In fact, it was the BJP that in a way stole Congress's (reform) clothes. And if Manmohan Singh is there - he's a great reformer."

After a panic plunge of over four percent as the outcome looked neck and neck, the BSE 30-share benchmark Sensex rose 0.77 percent to close at 5,399.47. Foreign investors, who pumped over seven billion dollars into Indian shares last year, helped drive the Sensex up 73 per cent, bought more shares Thursday.

"Foreign investors are bullish on India," said Alok Vajpeyi, president of DSP Merrill Lynch. "The left will tinker with policies but only superficially as everyone's in favour of infrastructure development and free markets,"

In any event, economists say India's economy is in strong shape after last year's best monsoon in a decade boosted rural incomes in an agriculture-reliant economy that fed industrial demand.

"This year, the economy in any case is going to have a growth rate of 7 per cent whatever happens thanks to strong industrial growth prompted by the monsoon," said DH Panandikar, economist at New Delhi think-tank RPG Foundation.

TK Bhaumik, economic adviser to the Confederation of Indian Industry, said he expected economic reforms under Congress to take a pro-people approach that would focus on boosting the agriculture sector and cutting unemployment, officially estimated at eight percent, but believed to be much higher.

But still, he said to lower unemployment, reforms were the only way to proceed. "The reform process and employment generation are very interlinked." Economists said, Congress's pledge to give reforms a "human face" could mean significant problems for India's hefty fiscal deficit.

International ratings agencies and private economists have said cutting the deficit is vital to sustained economic growth of eight-10 per cent. The aggressive pace of privatization seen over the past couple of years under the BJP also will slow if Congress holds to its pledge not to privatize any profit-making companies. -AFP