There was nothing that terrified investors more than the thought of a government in Delhi either dominated by the Left Front or at least influenced by it. All of them slept a lot better on Saturday, May 16, and they made their relief only too clear the following Monday.
I am not sure, however, if any small investors were able to make money on that manic Monday, when trading was effectively limited to sixty seconds. In any case, investors -- small, medium, or big -- collectively make up a small fraction of the Indian population.
While I am happy for those who have enough spare cash to invest in the markets -- directly or through, say, mutual funds -- what does the decisive mandate won by the United Progressive Alliance hold for the rest of India? The vast majority that believes it has no stake in the rise or fall of the Sensex?
There are two all-important areas where a government failure shall not be pardoned by the voter, namely food and jobs.
To begin with the first, I am frankly worried that we are in for more bad news. On Thursday, May 14, every news channel and newspaper in India seemed obsessed with opinion polls and exit polls. Everyone seemed to miss an item put out by the United States government. Food prices, the Americans said, had spiked in the month of April, the single biggest jump in more than a year. Prices had increased across the board, from wheat to vegetables, from coffee to eggs.
This time last year economists were blaming much of the rise on that incredible rise in petroleum prices, when prices were above US $140 a barrel. That explanation is not around any longer, with prices falling well below half of the peak.
Petroleum prices may have fallen but other factors remain -- a chronic drought in wheat-exporting Australia, American and European farmers turning to bio-fuel crops which means less acreage for food crops, and so forth. Does the Manmohan Singh ministry have a comprehensive and coherent programme in place to ensure food security?
As for the second point -- jobs -- I can do no better than quote T V Mohandas Pai of Infosys. In a few weeks, he pointed out on one of those post-election chats, some three million students will be graduating; they will walk straight out of their colleges into unemployment centres. What is worse, he added, is that many young Indians shall not just be unemployed but unemployable, lacking the skills required by the global economy.
What exactly did the previous government do in this area, to create jobs and to upgrade skills? Granted that labour reforms were impossible due to the CPI-M's veto, couldn't more have been done in the area of education reforms?
Would it be fair to say that the prime minister was saddled with a human resources development minister who displayed neither aptitude nor enthusiasm for the job? Can you think of anything notable that Arjun Singh did or said in the past five years apart from his attempts to bring the Indian Institutes of Management under his thumb?
Education, in any case, is an investment that generally bears fruit only in the long term. Investing in infrastructure gets faster results and, if intelligently planned, continues to have benefits long into the future.
One of the greatest failures of the first Manmohan Singh ministry was its inability to carry on the road-building programmes initiated during the Atal Bihari Vajpayee years. Some of the blame must be laid at the doors of T R Baalu, the minister of shipping, road transport and highways. But he belongs to the DMK ranks, and Dr Manmohan Singh's powers to discipline him were, to put it delicately, limited.
None of those excuses hold any longer. The CPI-M is out of the picture. The Congress's hands have been strengthened, hopefully to the point where key ministries need not be doled out to smaller allies. And, even more hopefully, the Nehru-Gandhis will back Dr Manmohan Singh's reforming instincts against relics from an earlier age.
But even with the finest intentions and with the most talented individuals placed in key posts, is it too late?
India saw five wasted years under the economist prime minister when 'reform' was a dirty word while lip service was paid to 'development'. We know that revenues grew as the economy boomed but where did all the money go?
Thousands of crores were spent on loan waivers for farmers and the rural employment guarantee scheme. Those are perfectly good vote-catchers but where are the lasting benefits? Where are the trees that were planted and the canals that were dug, the roads that were paved and the low-cost houses that were built?
Rather than save a little for leaner times, the first Manmohan Singh ministry seemed bent on a policy of 'spend, spend, spend some more.'
The result is that public debt as a percentage of annual GDP had reached a highly uncomfortable 78 per cent as of December 2008 according to foreign observers. (I assume this includes debts incurred by state governments too.)
When was the last time that happened? 1991, when Dr Manmohan Singh was chief economic adviser to the Chandra Shekhar government -- and India was forced to pawn its gold to stay alive.
Confronted with such disconcerting numbers, Dr Manmohan Singh's ministers speak airily of managing everything, with optimistic projections of 8 per cent growth if not more. Independent observers are not so cheerful; the IMF says India's GDP shall grow by only 4.5 per cent and the World Bank projects an even glummer 4 per cent growth rate.
How is the shortfall going to be made up? The Indian government's debt stood at an already incredible Rs 18.09 trillion just nine months ago; loosening the purse-strings before the elections means that the debt is now a massive Rs 20.65 trillion. There is now talk of even more stimulus packages, but where is the money to come from?
One of the paradoxes of the global recession is that money managers are looking for places to park their money. India now has a stable government and the Indian economy is still growing rather than shrinking. I have heard that we could see at least ten billion dollars arrive in the next twelve months or so.
That is good news but it is up to the Manmohan Singh ministry to ensure that these funds reach the grassroots and are not confined to stock market speculation. Money invested in, say, a power project will remain in India; money used to gamble on the Sensex can move out even faster than it arrived.
The Left is out of the picture. The smaller allies will be silent in the face of larger, more dominant Congress numbers. If he shall not do so today, can Dr Manmohan Singh ever push reforms and infrastructure initiatives?
The time for excuses is over, Mr Prime Minister.