Uncertainty will hit growth: Tata

New Delhi, Aug 25: Contending that political uncertainty will cause the country to stumble and growth to reverse, business baron Ratan Tata has said India can ill-afford a mid-term election in the wake of the standoff between the UPA government and its left allies over the nuclear deal with the US.

Claiming that the nuclear deal is ''the best possible thing that has happened to India'', Mr Tata, the doyen of Indian industry and Chairman of Tata Sons, said ''uncertainity in the political environment will certainly cause India to stumble (and) will cause the momentum of growth, which we have enjoyed, to pause if not reverse.'' In a two-part interview to Mr Karan Thapar, to be telecast by CNN-IBN on Sunday in their prograamme Devil's Advocate and by CNBC in India Tonight on Monday, he said a mid-term election would make India's target of 10 per cent GDP growth 'difficult'.

Mr. Tata described the Indo-US nuclear deal as ''in many ways the best possible thing that has happened to India in a long while''.

He said if it did not materialise, it would be ''a serious setback to India'' and would have an adverse impact on FDI inflows.

Mr Tata also argued that if the deal did not materialise, ''the only people who will be happy would be the people of Pakistan and of China.'' Praising Prime Minister Manmohan Singh and West Bengal Chief Minister Buddhadeb Bhattacharjee for their sincerity, he also spoke about the need for government to be bold, adding that ''India needs to be a more open financial economy.'' At the same time, the private sector would need to learn to ''conquer fear'' and be bold, he said.

About the nuclear deal, Mr Tata said it would not only enable India to go ahead on a much larger scale in the much needed area of nuclear power, but also take away many of the dual use sanctions which had hurt India's technological access. ''Over time this will give India a tremendously powerful position in the knowledge industry, in R&D, in high technology. I believe the benefits the nuclear deal will bring to the country will be enormous...,'' he pointed out.

While praising the Prime Minister for being an upright person of high ethical values, Mr Tata also maintained that ''this government has not been able to perform as it could have or should have performed.'' But it was West Bengal Chief Minister Buddhadeb Bhattacharjee who came for a lavish praise from him.

''I have seldom dealt with a Chief Minister who is more sincere'', he said, adding ''it has been absolutely a pleasure to deal with him.''.

Asked about how he viewed the prospect of a mid-term election, Mr. Tata said he hoped there would not be one because he feared it could stunt the country's economic progress.

To a query whether a mid-term election would make 10 per cent growth unattainable, he said it would definitely make things difficult.

Mr Tata also spoke of the need for India to be bold but this would require changing the mindset and legacy inherited from the days of the planned economy.

''If you look at China and India, one glaring difference is that everything China has done has been enormously bold, in fact unbelievably bold, on the verge of seeming to be an overkill.

''(In contrast) we're always growing in small increments and we're always behind the curve and we're always trying to catch up and perhaps the time has come to go ahead of that curve and think really boldy.'' Blaming the planned economy and the licence raj that prohibited India face an open, competitive world, he said the country had rather lived in a world ''which buffers and protects you.'' He said India is very entrepreneurial ''but somehow in the private sector we are afraid of competition. We are afraid of foreign competition. We often don't want to see this take place.'' Mr Tata's prescription for India is to be a more open financial economy through further liberalisation of financial services, banking and insurance. Which needs to be opened up.

''There can be constraints on market share that you put so our financial services don't get dominated by foreign companies but, nevertheless, it needs to be opened up.'' In this connection, he pointed out that the government's failure to implement the insurance and banking reforms it promised three years ago, had not sent out a positive message.

Asked who or what was holding up the promised reforms in banking and insurance, Mr. Tata said it was vested interests which comprised elements from the private sector, the public sector and politics.

He said the government had been very vocal on reform and the Prime Minister has genuinely and seriously wanted to see the reform take place, but the political system had not allowed delivery of that reform to take place.

A solution for it, according to him, could be India going back to the days ''when we had stronger coalitions or single parties in government and a two-party system in the House where you really dealt with issues and serious ideologies rather than opposition for the sake of opposing.'' He said what he hoped for was ''a strong government, with a strong majority, confident of itself, committed to what it's doing and having one voice.''

UNI