The United Progressive Alliance plans to take advantage of the exit of the Left from its governing partnership to move swiftly on next-generation reforms like 100 per cent foreign direct investment in telecom services.
Sources added that the government may also choose to open up some specialty retail sectors like sports goods and electronics to foreign participation. This was part of its reform agenda that was kept in abeyance last year in anticipation that the Left, whose 61 MPs voted with the UPA in Parliament, would oppose the move.
Atomic energy generation, which is barred to even domestic private companies, may also be opened to private investment.
These issues are over and above key pending legislations to reform the banking, insurance and the pension system, which have been stuck owing to consistent Left opposition, chiefly to greater foreign participation in these sectors
Sources close to the developments said that the government might make its first moves in this direction soon after it settled down with its new political partner, the Samajwadi Party. The Left formally withdrew support to the government on Wednesday and the SP, with 39 seats in Parliament, extended it.
A trust vote is slated for July 21. Though the UPA is still a little short of the required numbers for a comfortable majority, the stock markets appear to have cheered the renewed prospects of political stability with the new alignments in the government.
Today's developments have raised the sense of expectation in government and industry circles that Prime Minister Manmohan Singh, along with key ministers like Finance Minister P Chidambaram and Commerce Minister Kamal Nath, will be able to finally deliver on their earlier promises.
Rajya Sabha MP Rajeev Chandrasekhar feels that with the political crisis over, the inertia in governance over the past two or three months will end. "Hopefully, the government will come back to address pressing issues on the economic front, now that the political crisis is past. And, if in the process it passes pending legislation, it would be a good thing," he said.
The fact that less than a year is left for general elections is, however, considered a constraint. "Frankly, it is election year and I do not think that the government will have the time to focus on too many reforms," said a leading industrialist.
The SP's economic demands over the past few days, as articulated by General Secretary Amar Singh, have also led to fears that corporate rivalries and interests may extend from the boardroom to government decision-making.