Policy changes with retrospective effect bad for investors

NEW DELHI, Sept 9: It is up to the government to make any change in the past policy, but doing it with the retrospective effect would certainly be bad for investors, industry body Assocham has said.

Disapproving de-allocation of coal blocks, Assocham said tjhat business investment decisions are taken based on the “policy of the day”, which should not be tampered from retrospective effect.

“When coal blocks were allocated to both the private and public sector for captive use, there was no policy of auction. It was done by inviting bids. That was the policy of the day then, which must be respected by the subsequent governments to ensure stability of the system,” it said.

The industry body said it was upto the present government to make any changes in the past policy, but doing it from the retrospective effect would certainly be bad for the investors.

“When the blocks were allocated, there were virtually no takers. It was only after they were allocated, some people felt they have discovered gold. Valuation of some of the companies given the blocks would also have gone up,” it said.

“Most of the times, valuations are also a function of perceptions which keep changing. See how valuations have fallen across the sectors in the stock markets. Just because valuations go up does not always mean there is a scam,” it added.

However, it added that it was not in favour of defending those who indulged into wrong-doings to get the coal blocks, but at the same time, every firm which has been given blocks cannot and should not be treated alike with suspicion. (PTI)

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