By Ruma Dubey

Shilpa Shetty feistily gyrated in the Hindi movie Shool, singing, “Main aayi hoon UP, Bihar lootne” but looks like UP alone has looted the Congress of what little integrity and reputation it had.

A few important insights have emerged from these elections. First and foremost, national parties – BJP and Congress and national leaders have been disseminated; it is the regional parties which today rule the roost. The people’s mandate has clearly indicated that the preference is for regional, local parties and leaders. The disenchantment and distance between Delhi and the rest of India is on the rise. And at this juncture, looking at the results we see today, seems like the Congress and BJP need the regional parties for survival and it is not the other way around.

The second insight is that people do not tolerate a non-performer. The kind of drubbing which the Congress has got in these elections, is a huge setback and extremely demoralizing for the party. Punjab is a huge upset. This drubbing is a consequence of their own doing, undoubtedly. Charges of corruption, rising costs, falling growth rates and constantly walking on the thin ice of holding a highly fragile coalition together has been its undoing.  If these elections were an indication of what is to come in 2014, clearly, Congress is way down at the bottom.

The third insight is that their ‘star’ performer , Rahul Gandhi turned out to be more like a shooting star, all beautiful and sparkling but ultimately just a piece of stone when it hits earth. Though it is too early to write off Rahul Gandhi, what happened to him is probably again due to the over hype created by the party and media, making him look like the messiah from God. That in all probability has led to this backlash. Introspection is probably in order for both, the Congress party and Rahul Gandhi.

The markets are today all about politics. It is not quite happy about Samajwadi Party (SP) gaining the majority. The reasons for this are manifold. Firstly, it does not want SP to form a Govt at UP on its own, as it feels this threatens the existence of Congress at the centre and this may not be pro-industry. That is the reason why we are now seeing profit booking in sugar and ADAG counters. Secondly, the market is fearful that given the kind of drubbing Congress has got, it will throw economic logic to wind and go for more populist and social policies and exert further pressure on the already burgeoning fiscal deficit. This may not happen at the Union Budget alone as it is a small part of the entire economic reform process of the Govt. Budget, per se might not give us any indication of the way the Govt is thinking at the moment. It is expected to be largely lackluster, it would be business as usual. It is only next year that the Budget will be all about winning the votes. Ideally, the Govt should project that there is a very able leadership at the center and it is focused on growth and fiscal deficit. But the way the Govt has been dragging its feet on all aspects, this may not happen; it will continue to merely ‘ho-hum’ its way through till 2014.

There is worry that TMC might pull the rug and Dr.Singh might go. Well, its too early to take a call on TMC but mid-term polls seem unlikely. And Dr.Singh will try and complete his turn.  Markets are expecting the Govt to push through FDI in retail and aviation. But, this might not happen at this juncture, as the Congrees cannot simply afford to take any risks now. It will just let it be.  Yes, it might push through Food Security Act and that might not necessarily be a good thing.

For now, the market is hoping that SP and Congress form some sort of alliance. There are too many uncertainties at the moment and that is something which the market does not quite like.

One big question over and above all these – the cycle has crushed the elephant, so will Mulayam Singh Yadav trample down the mammoth elephants and statues erected in UP post his victory?