The government’s attempts to privatise are being stalled because of its need to reassure striking unions who eventually decided to curtail their original five-day industrial campaign, Capital Economics economist Shilan Shah told Bloomberg.
“The difficulties of implementing much-needed reform were made all the more clear by Energy Minister Piyush Goyal who, in a move to appease unions, stated yesterday that there were no plans to liberalise the coal sector,” he reportedly said.
Even if the government were successful in selling off 10% of India as publicly stated, this was less than what is needed to “substantially boost efficiency”, according to Shah.
There are no guarantees of foreign interest even if restrictions on foreign investment ease and low coal prices make industry less profitable; investors may shy away from India’s “difficult” mining business conditions, according to Shah.
“The prospects for longer-term reform in the sector look bleak,” Shah told Bloomberg.