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Wednesday, December 24, 2014

Hope of better days – a guest post

The recently concluded winter session of Parliament was marked by controversies and obstructive demonstrations by opposition parties. Lok Sabha, with its BJP majority, was in session for almost 100% of its schedule – one of its best performances in several years.

Not so for the Rajya Sabha where BJP was in a minority. Several sessions were abandoned on some pretext or the other due to virulent attacks by the opposition parties. BJP got a taste of its own medicine. They had noisily obstructed parliament proceedings during the previous regime.

What about Narendra Modi’s poll promise of ‘acche din’? With important bills getting stuck, there is talk of the government resorting to the ordinance route to move ahead with its reform agenda. In this month’s guest post, Nishit takes a realistic look at the prospect of better days for the country, and the stock market.

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The Modi Government got elected on the promise of ‘Good Governance’ and the hope of India seeing better days ahead. Ten years of UPA rule had left the country’s spirit broken especially in the last few years.

The Modi Government has completed about 7 months in power. They have made all the right noises about reform in Parliament, hosted foreign dignitaries and announced various cleanliness drives.

The key concern was the lack of majority of the BJP in the Rajya Sabha and their ability (or lack of it) to push through key reform bills like the Insurance Bill.

To add to the confusion, various BJP members have been making controversial statements leading to Parliament getting stalled.

Since this is the first full session in Parliament, the Modi Government may get the benefit of doubt. The same benefit will not be available from the Budget session onwards. They will have to come up with an alternative to the chaos in Rajya Sabha.

One of the solutions could be having a joint session of Parliament, or winning over some regional parties.

The honeymoon period is over now and it is time for action. The decisive moment will arrive sometime in middle of February when the Budget session kicks off.

The Government has been lucky with the decline in crude oil prices, which is a once in a lifetime event for any Government. They have been given an extended lifeline thanks to this.

The entire market rise so far - on the hope and hype of Modi - is over. Further rises will be dictated by performance alone.

Progress on the GST Bill, the Insurance Bill, the Union and the Rail budgets are some points which the FIIs and the investment community will be keenly watching over the next few months.

If the Global factors settle down, then one could see a buoyant pre-Budget rally on hope. But if the budget disappoints then one could expect a major correction post the budget.

‘Acche Din’ was a good marketing slogan. Falling oil price helped bring in some cheer but the real battle starts now.

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(Nishit Vadhavkar is a Quality Manager working at an IT MNC. Deciphering economics, equity markets and piercing the jargon to make it understandable to all is his passion. "We work hard for our money, our money should work even harder for us" is his motto.

Nishit blogs at Money Manthan. You can reach him at nish.stockid@gmail.com)

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