India Growth To Steam On, Unharmed By Political Woes

India''s economic reform process is as good as stalled due to differences between the government and its communist allies, but analysts say the economy has gained its own momentum and will keep growing robustly for now.

The latest and loudest disagreement, which blew up at the weekend over a nuclear energy deal with the United States, has yet to be resolved. While many expect a compromise rather than a new election, reforms are seen as the likely losers once again.

The four communist parties, who provide crucial support to the coalition headed by Prime Minister Manmohan Singh, have already blocked plans for partial privatisations. Reforms of pensions and insurance have also slowed to a crawl.

Despite this, economic growth has averaged 8.6 percent a year since the coalition took power in 2004. Growth hit 9.4 percent last fiscal year and foreign investors, attracted by the long-term prospects, have poured in billions of dollars.

I don''t think it will derail the strong economic performance, but (it) will delay reforms, said D.K. Joshi, principal economist at domestic rating agency Crisil.

India''s stock market, a barometer for political risk, shrugged off the crisis and ended nearly 2 percent up on Monday, with attention focused more closely on how international markets were faring. The rupee and bond markets were closed for a local holiday.