Old Nehruvian policies clinched the deal for Congress in national elections

B D Narayankar

The Congress, which was written off by media after its debacle in 1998 national elections, has bounced back with astute political decisions. What were these decisions? What was the secret for people giving Congress and its allies reach close to the half-way point? Well it was an intelligent ploy of AICC chief Sonia Gandhi to find news ways of implementing old Nehruvian policies.

Sonia was quick to realize the mirage of 'Shining India' campaign launched by the BJP in last national elections. The campaign was based on the principles of market economy.

Sonia sensed rural India counts much more than booming Sensex for political parties in a democracy. She knew market-led economy was good for the Sensex, but not enough to garner rural votes. She not only worked hard on her vision to woo the rural voters, but also urban middle-class.

Sonia succeeded in attracting the rural electorate to the Congress by implementing the National Rural Employment Guarantee Act (NREGA) with 100 days of employment for one member in every family and waiving loans for farmers. She succeeded in switching the loyalty of urban middle-class by giving government employees massive pay hikes.

India's PM Manmohan Singh has in the recent past favoured a slew of economic polices that were staunchly opposed by the Left when the Communists exercised their veto power on the UPA government for more than four years.

Such policies included moves to increase the cap on foreign shareholding in Indian insurance companies from 26 per cent to 49 per cent, removal of the 10 per cent limit on voting rights of foreign investors irrespective of their shareholding in private Indian banks, doing away with the ban on foreign direct investment in multi-brand retail outlets and allowing pension funds to be invested in stock markets.

Investors could not have wished for a better outcome of the elections. The Congress and its allies have the numbers to last its entire term. They have stability, which means the government will have freedom to follow prudent financial policies and reforms. They have hope, because of unchallenged Manmohan Singh's reformist credentials. Liberalizing foreign direct investment and disinvestment will now get a push. In fact, sources revealed that former home minister P Chidambaram is keen on disinvestment. These liberalizing efforts have the potential to bring in global money.

Simply put, the risk in the Indian market has been substantially lowered by the election outcome. So the market has plenty of reasons to celebrate. Infact, the Sensex recorded its fastest ever 2000 points surge in history, taking not more than a few minutes to jump from 12,173 to 14,284, as the bulls stormed the bourses on May 18. For Sensex, this was the first close past 14,000 since 21st September 2008. The Sensex had closed at 14,042.32 on that day. The Nifty recorded its best close since September 10, 2008.