Chidambaram must be squirming. Poor man, he’s been slogging it out for the last year and a half, trying to get important decisions taken. Now that the stock market has started responding, here comes Narendra Modi, the perpetual usurper of everything good, and takes the credit away. How exactly does Modi do this? I suspect through his PR overdrive and his over-eager followers (the gujarati-driven broker community).
If newspaper reports are to be believed, the markets are discounting the possibility (no, make that certainty) of Modi becoming PM in 2014. Really? How do these brilliant soothsayers know this? No opinion poll till date (with all their inbuilt faults) have said any such thing. All of them are in fact showing that the NDA is going to be woefully short of a majority. In fact they show that the NDA is going to be struggling to hit even the 200 mark. And everyone knows that very few parties want to tie up with them at this point in time. How then does this community of brokers know so much about the future, if not for the little “nudging” that APCO (Modi’s PR agency) or Modi’s own “chamchas” must be providing?
Modi’s motivated supporters offer evidence which wouldn’t pass muster with even morons. Apparently, the stock market has risen since the time Modi was anointed PM candidate. This data point might be true, but where is the correlationship between the two events? So many things have happened in the last few months. Can all of them claim they have influenced the movement of the sensex? The correlationship however exists between the work that Chidambaram and several other organs of the government have done since the same time.
Take Chidambaram himself first. He has been instrumental in setting up the CCI (Cabinet Committee of Investments) which has cleared projects worth more than Rs 3.5 lac crores. He has toured global business capitals and made pitches about the India story to global investors. He has pared government expenditure, first last year and then now, and reassured the markets that the fiscal deficit will be kept at 4.8% or lower. He has tweaked tax rates to drastically reduce gold imports, giving credence to his assertion that the CAD will be kept below $70 billion. And very importantly, he has brought in Raghuram Rajan as the RBI governor. Chidambaram is a silent worker; unlike the raucous Modi. This does not mean Narendra Modi can steal the credit away.
Now come to Raghuram Rajan. Everyone knows what the man has done since he took over in September. In fact, the maximum correlationship between the sensex and anything is with Rajan’s arrival. The man controlled the precipitous fall of the rupee in no time, bringing confidence back into the external sector. He launched the forex swap scheme bringing in $10 billion already. He allowed banks to borrow abroad to double the limit they were allowed to earlier. In short, he brought sense back into the senseless fall of the rupee. In recent times, the sensex has responded most to the fate of the rupee, not the fortunes of Narendra Modi.
Then the huge impact that the postponing of the US Fed’s QE program has had on the Indian markets is well established. This has been further aided by the appointment of Janet Yellen as the next Fed Governor. The day the Fed announced the postponement, the sensex soared 700+ points. It didn’t soar anything when Modi was announced as the PM candidate. Also, there has to be a certain honesty in politics. How is it possible that when the rupee was falling, the BJP blamed the Congress (remember the “now Sonia’s age, soon PM’s age” barb?), but when it recovered smartly, it is because of Narendra Modi?
There are two things that emerge. First, the Congress has got the economy moving again. Everyone agrees that the worst is behind and the future is better. Whether the growth ends up at 5% or a shade lower or higher is a matter of detail. The other thing is something that we all know. Narendra Modi has a well earned reputation for being a #feku. That’s been proven again.
The real truth is that the markets have risen because of an improving business scenario, and because the US Fed has delayed its pull back of the Quantitative Easing program. It has nothing to do with Narendra Modi. All that this shows is the desperation of the messiah to grab everything good the government does with both hands.