The UPA’s burst of action last week — topped off with the PM’s attempt to enthuse Dalal Street punters — is a false dawn.
The prime minister, market watchers concluded, talked the market up on Friday. On Wednesday and Thursday, the Lok Sabha passed two bills — on food security and land acquisition — that were left of centre in a way that defines Sonia Gandhi's politics.
So, if the PM can cheer the markets while Gandhi can successfully annoy economists and India Inc, can we say this is the beginning of the end of Congress's torpor? Because, this was always the plan in the UPA, I or II — that Singh will comfort the classes and Gandhi, the masses. (That this is a false distinction — high growth helps the masses faster than anything else — is not an argument Gandhi buys.) Those looking for signs of a reinvigorated Congress, however, must not hope for much. Anything can happen in Indian politics. But as things stand now, there are two reasons why the Congress's attempt at re-energising itself may look less than convincing.
The Clock is Ticking
First, never mind Friday's 'corrections', markets and investors are likely to remain sceptical of Manmohan Singh's government for the duration. They are looking for good economic numbers. Though the Indian economy is nowhere in as bad a shape as is often assumed these days, good numbers that will produce a sustained cheer will be hard to come by before elections.
Remember, the US Fed's monetary tightening schedule begins in a few weeks and what that might do to market indices and already shaky investor confidence is anyone's guess. As Swaminathan Aiyar argued in ET (August 29, 2013), India's policy options are likely to be limited — interest rates will have to kept high because of the sliding rupee, expansionary fiscal policy is ruled out and if there's a domestic private investment surge, it will be a miracle.
The upshot is while India's growth and investment cycle will revive, the Congress doesn't have the time, the credibility or the options to convince the classes that it's taking the economy seriously again.
This is, of course, entirely the Congress's fault. Singh and Gandhi seemed okay with Pranab Mukherjee running economic policy for three-plus years as if his mandate was to chip away at investor confidence. That Mukherjee is a veteran, a fine political mind, a master of details, etc were all irrelevant if he did a bad job of running Asia's third-largest economy. It's a measure of how perverse Indian politics can be that P Chidambaram may not have been at the helm of North Block even now had Rashtrapati Bhavan not had a vacancy last year. But Chidambaram — and Raghuram Rajan in RBI — can't deliver a miracle in the next six months.
Therefore, the PM, whose credibility as an economic policy maven has taken a serious hit, is unlikely to become a soothing voice for the classes. Neither are the masses likely to get terribly impressed with Sonia Gandhi's social engineering — and that's the second reason to not bet big on a reinvigorated Congress.
So, if the PM can cheer the markets while Gandhi can successfully annoy economists and India Inc, can we say this is the beginning of the end of Congress's torpor? Because, this was always the plan in the UPA, I or II — that Singh will comfort the classes and Gandhi, the masses. (That this is a false distinction — high growth helps the masses faster than anything else — is not an argument Gandhi buys.) Those looking for signs of a reinvigorated Congress, however, must not hope for much. Anything can happen in Indian politics. But as things stand now, there are two reasons why the Congress's attempt at re-energising itself may look less than convincing.
The Clock is Ticking
First, never mind Friday's 'corrections', markets and investors are likely to remain sceptical of Manmohan Singh's government for the duration. They are looking for good economic numbers. Though the Indian economy is nowhere in as bad a shape as is often assumed these days, good numbers that will produce a sustained cheer will be hard to come by before elections.
Remember, the US Fed's monetary tightening schedule begins in a few weeks and what that might do to market indices and already shaky investor confidence is anyone's guess. As Swaminathan Aiyar argued in ET (August 29, 2013), India's policy options are likely to be limited — interest rates will have to kept high because of the sliding rupee, expansionary fiscal policy is ruled out and if there's a domestic private investment surge, it will be a miracle.
The upshot is while India's growth and investment cycle will revive, the Congress doesn't have the time, the credibility or the options to convince the classes that it's taking the economy seriously again.
This is, of course, entirely the Congress's fault. Singh and Gandhi seemed okay with Pranab Mukherjee running economic policy for three-plus years as if his mandate was to chip away at investor confidence. That Mukherjee is a veteran, a fine political mind, a master of details, etc were all irrelevant if he did a bad job of running Asia's third-largest economy. It's a measure of how perverse Indian politics can be that P Chidambaram may not have been at the helm of North Block even now had Rashtrapati Bhavan not had a vacancy last year. But Chidambaram — and Raghuram Rajan in RBI — can't deliver a miracle in the next six months.
Therefore, the PM, whose credibility as an economic policy maven has taken a serious hit, is unlikely to become a soothing voice for the classes. Neither are the masses likely to get terribly impressed with Sonia Gandhi's social engineering — and that's the second reason to not bet big on a reinvigorated Congress.
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