From Black Monday to Golden Monday

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The life and times of UPA : Five years on, every piece is falling in place for India even in torrid times for the global economy... And the world is watching!

The message from the election results 2009 is loud and clear: Indians have emerged and India’s thinking has improved. Evolving is a continuous process in any country’s life and we have displayed it thoroughly this time.

Exactly five years back, on May 17, 2004, when UPA came to power, the capital market welcomed it with a ‘thumbs down’, sending the market to the ‘lower circuit’ of -10%, (infamously known as ‘Black Monday’). Make no mistakes; it was justified then, because of the fear of ‘unknown’. The market wasn’t able to digest how the new government would handle the ‘emerging’ Indian ‘growth story’. Until then, the capital market participants were on a high about Indian prospects, with a flurry of reports from global research houses suggesting the rise of India as a super-power. The market had feared whether the then government would prove to be a spoil-sport.

However, God is living somewhere in New Delhi since then. Almost everything went right in Indian economy in terms of GDP growth, industrial production, rainfall, exports, Balance of Payments, demographics, FII & FDI inflows. Indians are extremely lucky to be served by some of the finest brains in the form of ministers and regulators at RBI and SEBI. An enviable team with abundant knowledge and qualifications, comprising of Manmohan Singh, P. Chidambaram, Y. V. Reddy, Montek Singh Ahluwalia and C. Rangarajan has given proper direction to the unleashing strength of Indian economy. This has helped India survive the impact of an unprecedented global crisis with least possible injuries. All of them truly deserved to be called as the ‘leaders’ rather than ‘regulators’. What is most striking is that these ‘leaders’ are not just intellectuals but balanced and matured individuals. And, the ever-maturing Indian voters have taken notice of their efforts and blessed them with thumping success in the current elections. After five years, on May 18, 2009, the capital market has welcomed them with a big ‘thumbs up’, sending market to ‘upper circuit’ of +20%, (famously titled ‘Golden Monday’). That’s right, this is the best election result India has had in the last 30 years and this is the best ever capital market performance. So, the ever-related Delhi politics and Mumbai capital markets have seen full circle from ‘Black Monday’ to ‘Golden Monday’.

Way to go...

In the previous UPA government, the Congress had a tough time convincing the Left to implement any developmental projects. Of course, in a way this helped Congress to take shelter for any of their under performance. However, this time they are extremely well placed with a clear mandate, improving global economy, best of demographics and quality leaders. This obviously raises expectations on their performance delivery. The world is looking at India, and the investors are looking at Indian government.

One thing is for sure: the level of confidence in the tone of market participants has increased substantially. Unless there are any global shocks, India should be flooded with fresh investment, increasing job opportunities and rising capital markets. Revival in PSU IPOs and disinvestment will help the government reduce its fiscal deficit and IPO markets, in general, will be revived sooner than later. Further, the government can relax FDI guidelines to some extent encouraging more foreign inflows in industries such as retail, mining, telecom and insurance.

As the government is free from the ‘Left’ load, it can think of ‘right’ things. If all goes as planned (of course, not possible as per Murphy’s Law), during the tenure of this 15th Lok Sabha, India will truly emerge as an economic superpower. And also, Indians will enjoy their best times ever in their standard and quality of living. These future generations will live in much better living conditions than their erstwhile generations have ever done.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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