Market could not have asked for more

Ashok Dasgupta

‘Economic reforms will be high on agenda of the new government’

The immediate priority will be to take steps to neutralise the impact of global turmoil

NEW DELHI: The market could not have asked for anything better. A clear and decisive mandate for a second term for the Congress-led UPA Government — without the need for outside coalition partners — was perhaps beyond the imagination of the Congress itself, leave alone the market investors.

Clearly, the astute Indian voter and the reforms have come out the winner. Hesitant the whole of this week, it was on Friday (May 15) that both the BSE and the NSE rallied on expectations on the basis of exit polls that either the Congress or the BJP would emerge as the single largest party in the Lok Sabha.

A lurking fear among investors and market analysts was whether the Left parties would hold sway in the formation of the government.

Now that there is no element of confusion in this regard, the bourses are expected to welcome the unexpected development in euphoric frenzy when they open for trade on Monday. And, this would be despite the negative cues emanating from the U.S.

Needless to say, the boost in market sentiment would stem from the continuity of a “stabler” UPA government at the Centre leading to a marked improvement in business sentiment and inflow of foreign investment which together are expected to expedite recovery of the country’s economy that has been reeling in the wake of the global meltdown.

Alongside, the road is now paved for implementation of the pending reforms in sectors such as banking, pensions and insurance which had been put on the backburner owing to stiff opposition by the UPA Government’s erstwhile Left allies.

Commenting on the poll outcome, Prime Minister’s Economic Advisory Council (PMEAC) Chairman Suresh Tendulkar noted that the verdict in favour of the Congress and Manmohan Singh was for a “stable and good government” and the new set-up at the Centre would lay greater stress on economic reforms. “Economic reforms would certainly be on top of the agenda of the government but let’s wait for the constitution of the Cabinet…An economist is going to be in control of the nation. He is going to be the in-charge and that is a welcome sign for economic growth,” he said.

Echoing similar sentiments, PMEAC Member Saumitra Chaudhuri said: It [the mandate] is a matter of great relief and will be very good for the economy. Investor sentiment will improve as there is a clear mandate for five years.”

Dubbing the poll results as “surprising”, Planning Commission member Abhijit Sen pointed out that apart from improving business confidence, it would also provide a boost to the stock markets. “This is a very good result. It [the verdict] is very surprising as even [the] Congress would not have imagined it…As the Left parties are not there, one will have to judge very carefully what does it mean.”

The new regime’s immediate priority, he said, would be to take steps to neutralise the impact of the global turmoil which is having a crippling effect on economic growth.

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