Three key sectors vulnerable to policy risks

With general elections round the corner, certain sectors of the economy including telecom, real estate, power–particularly discoms, mining, oil and natural gas, PPP-driven infrastructure, education and healthcare are highly prone to policy risks contingent upon the outcome of the polls, according to a study by industry body Assocham. 

“The companies in these sectors will have to factor in that any policy change arising out of political expediencies of different nature may affect their business model with the cost being the main differentiator. Of these sectors, the highest risk takers would be those in the telecom, power discoms and airport operators,” Assocham said in a statement released on Monday.

Besides policy changes, there can be risks from possible adverse court rulings with litigations pending in a host of scam-ridden sectors like coal, telecom and realty.  

The entire financial markets, mainly the stock market would be highly sensitive to the outcome of the Lok Sabha elections likely in April-May, the Assocham study said."An unstable government may not take some difficult decisions which the economy while on a downslide may need desperately," it said.

However, sectors like information technology, pharmaceuticals, agro-products, automobile, hospitality, would not face significant political risks, unless there is political instability, according to the study.

 “With populism being the buzz word and zeal for unearthing scams, businesses today are well-advised to factor in political and policy risks and map their business models accordingly," Assocham Secretary General D S Rawat said.