Economic fallout of Trust Vote

Now that government is done with trust vote and markets are about to wind up the sentimental rally, it the time to ask the question will government take tough economic decision as desired by the markets?

The coalition’s new partner SP has much neither much knowledge nor much penchant to interfere in economic policy until unless someone ask them to do it. So, in past four years they were very much against insurance, retail and pensions reform, which communist were insisting. But, in the new context they seem to be more concerned about their economic benefactor, which implies strict no-no to FDI in retail which may benefit Mukesh ambani. Also, petroleum ministry will be mired by all sorts of lobbying.

DMK is happy with its RamSethu bargain and rest like JMM has no clue whatsoever with the kind of reforms will take place. That leaves us with Congress, which is driving the UPA now.

Congress only faces the problem of perception and it matters a lot before elections. The party is already seen a failure in the economic matters concerning “Aam Admi” and its slogan is more or less read as “Congress ka hath NOTE ke sath”. Markets and traders will all like to see every bit of legislation that can benefit the markets get passed on, specially the Pension reform, which will benefit the markets most. A push in the market will also add to Congress’ election coffer. But it is the million dollar question; will Congress face all criticism just before elections to push the markets?