By Ruma Dubey

There is a sense of disquiet on the bourses. No one has yet pressed the panic buttons but there has indeed come in a niggling sense of doubt – will the Modi Govt go ahead with economic wherewithal while not allowing political intervention to supersede all decisions?  

First the railway fare hikes. The Govt showed gumption by hiking the passenger fares and freight rates. It is much needed – if we need better, modernized railways, which are more secure and clean, fare hikes are inevitable. Thus all who knew this truth, heaved a sigh of relief and even went on to remark that this new Govt, unlike the old Govt is pushing ahead with some tough economic decisions.

But it came as a rude shock to see the Govt bending down to voices of Opposition by rolling back some of the price hikes. The Govt probably, riding high on the popularity wave was wary of inviting the ire of the people and took a wrong economic decision. And then yesterday, everyone was eagerly awaiting the Cabinet Committee on Economic Affairs to take a firm decision – a straight yes or a no to the imminent gas price hike. But the Govt deferred the decision by three months, stating that it needed time to review the details before taking a decision.

Both these moves showed indecisiveness – something which was not associated with the Modi Govt. Throughout the election process, the message which was conveyed was that decisions will be taken fast and there was no need to pander to anyone’s approval of dissent. Yet, precisely the opposite has happened. It does not take too much to tinker with things which are positive moves – like the excise duty on automobiles. But what does require a determined sense of leadership is the ability to push through tough, not-so-popular decisions. If people had been educated about this, like the way people were made aware of the ills of the old Govt, wouldn’t people have seen sense?

Yes, we understand, one cannot judge the Govt based on these two disappointments. It’s too early for that. But the worry is that this should not be a harbinger of things to come. Over the past few weeks, since the new Govt was sworn in, we have heard rhetorics but not a single major policy announcement. Maybe it is waiting for the Budget to announce all. And that puts a lot of onus on the Budget – will 10^th July revive investment through smart policy decisions?

Fiscal deficit remains huge and all would now want to see, especially after these two ‘rollbacks’ whether the Govt will be able to raise revenue – will it do so by using innovative ways or through hiking taxes? There is a major need to cut expenditures too – will the Govt have the guts to bring down subsidies, which almost always goes to the undeserving?

Till last week, one had felt that Modi Govt, known to be aggressive, will push through all measures needed to revive the economy but today, there has come in a small sense of doubt. The new Govt, undoubtedly has a lot of things to do and it has been talking about it time and again. But now the market is getting a little impatient – it needs to see some action. There are huge expectations from the Modi sarkar and any form of rollback is seen as a sense of weakness – a trait of the UPA.

It is too early days to really judge but somehow, this bad signal sent out needs to be corrected. As such the market is weighed down by the worries of Iraq and monsoon; Modi Govt needs to work fast, talk less and show that indeed, achche din aagaye hai!