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On This Day - 14 MAY 2009
Government's promises will fuel damages
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Now, if the new government were to oblige to its pre-poll promises, the damage could only be imagined. India's debt, which has already been cut to negative by S&P, may even be downgraded to junk status. And that may not be a pleasing prospect for a country that needs capital by the dollops. One way out of the mess would be selling stake in government owned companies. But given the controversy it can create, especially if the Left parties have a say in government formation, stake sale is not going to be an easy proposition. Sadly, everything else looks long drawn out and difficult. If only we wouldn't have gotten ourselves into this mess.
At the same time, corporate India will be praying for stability. And as per vibes emanating from India Inc., which is already reeling under the global downturn, companies would like to see a stable government led by either the Congress or the BJP. And not without reason. After all, the Indian economy has become a trillion dollar one after good, consistent growth in the past ten years, which has seen both the BJP and Congress-led governments complete their terms.
Ranbaxy has seen its fortunes turn for the worse ever since its troubles with the US FDA began. Not only did the latter raise an import alert for 30 drugs from the manufacturing plants at Poanta Sahib and Dewas, it has also invoked an order which has halted the review of applications from the Poanta Sahib facilities. Thus, a rapid resolution of its issues with the US FDA is the only solution that will pull Ranbaxy out from this slump and Daiichi will also have to actively initiate talks with the US FDA to resolve the matter. But Ranbaxy's troubles run deeper and given that it is mired in forex losses, the possibility of raising debt to compensate for cash outflows cannot be entirely ruled out.
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