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India Elections 2009 - Flight to Stability-VRK100-17052009

India Elections 2009 - Flight to Stability-VRK100-17052009

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Nanndan Nilekani described the latest Indian mandate as a FLIGHT TO STABILITY. The UPA government has come retained power at the centre. Rama Krishna Vadlamudi, MUMBAI, INDIA (vrk_100@yahoo.co.in) explains the contours of UPA govt's victory.

The article narrates the prospects of Rahul Gandhi in the hustle and bustle of Indian Polity.

It also explains why the Left is left out. It also narrates the levels sycophancy in the Congress Party.
Nanndan Nilekani described the latest Indian mandate as a FLIGHT TO STABILITY. The UPA government has come retained power at the centre. Rama Krishna Vadlamudi, MUMBAI, INDIA (vrk_100@yahoo.co.in) explains the contours of UPA govt's victory.

The article narrates the prospects of Rahul Gandhi in the hustle and bustle of Indian Polity.

It also explains why the Left is left out. It also narrates the levels sycophancy in the Congress Party.

More info:

Published by: RamaKrishna Vadlamudi on Oct 08, 2009
Copyright:Attribution Non-commercial No-derivs


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Page 1 of 3
From 'Flight to Safety' to 'Flight to Stability'
Rama Krishna Vadlamudi 
MUMBAI May 17th, 2009 
Nandan Nilekani described the Indian mandate as a ‘Flight to Stability’ after the incumbent Indiancoalition government has won nearly a comfortable majority in the Elections 2009 results of whichwere announced on May 16, 2009. It is hoped that the country will get a stable government forthe next five years. This has brought lot optimism from the economy’s point of view. The road to‘Flight to Stability’ was, of course, a challenging one. Only as recently as September/October2008, India like the rest of the world had experienced a period of intense implosion following theglobal financial meltdown leading the world to an abyss. Close on the heels of the crisis, Indianfinancial markets have gone through a period of ‘flight to safety’ whereby market players haveembraced the so-called safe investments by paring down their risky portfolios. Now, the latestmantra of stability seems to be the panacea braving the challenges being faced by India.Let us see the broad contours of this verdict given by Indian voters:
All people who have predicted a more ‘fractured debate’ (including this author) in theparliamentary elections have been proved wrong by the Indian voters
The country is likely to experience a relatively more stable government compared to theprevious coalition governments in the last two decades or so
Congress party has made big gains mainly at the cost of the Left parties, BJP and someregional parties
Manmohan Singh seems to have earned good reputation among voters
Paradoxically, the communists in India have lost heavily in West Bengal and Kerala;while the whole world has been embracing socialism and state control after the collapseof unfettered free market fundamentalism in the US, Europe and other countries
BJP leader L K Advani has failed in his audacious bid to become prime minister
Regional parties led by opportunistic politicians like Lalu Prasad Yadav, Ram VilasPaswan, Chandrababu Naidu and Jayalalithaa are asked to sit on ‘benches’ for nowIn the last five years, the UPA government appears to have ‘earned’ good public image throughits NREGS scheme, farm debt waiver and bringing in the Right to Information Act. Moreover, ruralpeople seem to be basking in the glory of higher incomes. However, it is obvious that the UPAgovernment during 2004-09 seemed to have escaped the wrath of the voters for its failure totackle several issues: job losses in the manufacturing/export sector, price rise (do not believe theWPI inflation, look at the CPI inflation which is around 9%) in agri commodities that affected thecommon people the most, farmers’ suicides across the nation, horrible internal security (have youforgotten the bomb blasts at Bangalore, Ahmedabad, Hyderabad, Bombay, Delhi etc?), poornatural disaster management (floods in Bihar and Bombay), killing PSU refineries, like IOC, BPCLand HPCL, and meager record in the development of roads, ports and power sector.
Page 2 of 3
Rahul Gandhi: The ‘next Infosys’?
Indian voters have given Rahul Gandhi the status of a mid-cap stock, by promoting him from asmall-cap stock. He seems to have graduated to higher echelons after his apparent success inUttar Pradesh where congress party won substantial seats. Now, the question is can he grow tobecome a large-cap stock on his own merit. There is, however, no dearth of congress leadersincluding Manmohan Singh who sing the praises of Rahul and ‘thrust’ him to Himalayan heightsas if he is the ‘next Infosys.’ Unfortunately, many a time in the real world, obvious prospects forgrowth do not translate into obvious profits (with due apologies to Benjamin Graham). Manypeople hope that he can become a game-changer in Indian politics. Let us wait and watch.
“The Left is left out”:
It is the latest catchphrase of Indian stock market. This pithy commentfrom Bombay’s inveterate bull Rakesh Jhunjhunwala sums up the mood of Indian investors afterthe 2009 mandate. Investors, led by FIIs, may buy into stocks heavily on Monday, the 18
of May2009. Sensex may hit the upper circuit immediately after the market opening. Rupee also maystrengthen by up to four per cent on Monday and it may touch 45-46 in the next one or twoweeks. The prospect of a stable Central government is good news for the bond market. The hopethat the next government may push for disinvestment in a big way has fuelled speculation thatgovernment’s borrowing may come down in the next one year if disinvestment of public sectorundertakings brings substantial money to the government’s kitty.
Congress party: Is it reformist?
Even though the congress party has emerged as the single largest party with more than 200seats, it may not resort to any ‘big bang’ economic reforms that market players are expecting insectors, like, banking, disinvestment, insurance, pension, etc. If one sees its record over severalyears, it is difficult to believe that congress party basically is reform-minded, except for a fewveterans, like, Manmohan Singh and P Chidambaram. Even during 1991-1993, it was forced toadopt economic reforms due to the crisis thrown up in the aftermath of our forex reservesreaching an abysmally low level of USD one billion just enough for two weeks of imports. During2004-09, congress party has cleverly avoided economic reforms by blaming the communistsconveniently. Of course, the communists (except Buddhadeb Bhattacharya) have fought toothand nail in stalling reforms that would have brought long-term benefits to common people.In fact, it was NDA government during 1998-2004 that brought a lot of reforms: bringing downinterest rates drastically, tax reforms, road development through golden quadrilateral and openingup of telecom sector.The bigger conundrum for UPA is that its second most dominant partner is the mercurial MamtaBanerji’s Trinamool Congress; the party that had fought a bloody campaign against the TataMotors’ Singur plant in West Bengal and forced Ratan Tata to shift the ‘Nano’ plant to Gujarat. Noone will be surprised if she plays ‘red card’ for any reforms the congress party pushes for in theUPA. If she really resorts to such blunt tactics, the communists will have the last laugh!
Perils of cheap populism
The biggest and immediate challenge for the government is the presentment of full budget for2009-10. In the last one year, finances of the Central government have become messy andunwieldy, with ballooning fiscal deficit – which is more than 11% for 2008-09, slowing economy,falling tax collections and rising cost of populist schemes, like, NREGS, farm loan waiver and oilsubsidies. The problem with the congress party is that it firmly believes that these populistschemes have won them the 2009 elections. As such, there is merit in expecting that thecongress will stick to its old path of cheap populism. Moreover, none should be deluded intothinking that they will push heavily for disinvestment and such stuff; even in the absence of acommunist albatross around UPA’s neck. For decades, congress has hung on to power bymastering the art of placating the masses by throwing crumbs/sops to them instead ofempowering them with opportunities.

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