New Delhi, July 7:

India’s move to freeze its privatisation programme is a bad signal for reforms and highlights the uphill battle prime minister Manmohan Singh faces to liberalise the economy, analysts said today.

Only two weeks after announcing the government would revive asset sales, Singh said Thursday he was putting ‘on hold’ stake sales in state firms because of ‘representations from some of the (coalition) constituents and allies.’ The flip-flop followed a threat by a crucial coalition partner to withdraw from the government over the sell-off plans and strident opposition from communist allies amid fears of worker lay-offs.

“There’s no unified view within the government on economic reforms,” said political scientist Mahesh Rangarajan, “Governments in India usually have a two-and-a-half year opportunity to implement major changes before getting hesitant (with the prospect of new elections).

Well, we’re nearing that mark now.”

Economists said the asset sales whose proceeds were intended to fund poverty alleviation were not a key part of the government’s reforms programme and would not affect growth prospects for this financial year for Asia’s third largest economy which is forecast to expand by around eight per cent.

But they said the recetnt government announcement did not augur well for other liberalisation moves such as easing curbs on foreign investment and overhauling rigid labour laws to make it easier to hire and fire workers.

A Business Standard newspaper editorial said Singh, known as India’s economic liberator for launching reforms 15 years when finance minister, should ask whether he should stay on as premier.

“The political forces that have come together under the (coalition) banner and those supporting it from the outside like the communists, have no faith in the economic reforms that Manmohan Singh would push ahead with,” it said.

“So it is time he asked himself the tough question — ‘Why am I here.’