Dalal Street8217;s greetings

Though it's true that this week's 330-point sustained increase in the Bombay Stock Exchange's BSE sensex is largely to do with several ...

Though it8217;s true that this week8217;s 330-point sustained increase in the Bombay Stock Exchange8217;s BSE sensex is largely to do with several south-east Asian markets rebounding, it does signal a turnaround in investor sentiment, albeit a bit weak as yet. Coming as it does, on the heels of a major fall in prices of cars just last week, and in most electronic goods for the better part of last year, it is certain to make the beleaguered middle classes feel a lot better in the new year.

And if urban affairs minister Ram Jethmalani does manage to bring in his ordinance for abolishing land ceiling regulations later this month, we8217;re certain to see a sharper fall in property prices as well as a mini-boom in construction activity. The ordinance, as this newspaper has been arguing consistently since the time the United Front government first proposed it two years ago, will also give a boost to industrial restructuring, with companies free to sell their land to provide them much-needed funds.

Another factor which hascontributed to what Finance Minister Yashwant Sinha constantly, though perhaps a bit prematurely since he said this in August, calls the feel-good factor, is of course Prime Minister Atal Behari Vajpayee8217;s new-found liberation from the Sangh Parivar. No one is suggesting that last week8217;s confabulations at the BJP8217;s national executive at Bangalore will allow Vajpayee to go ahead and take bold reform decisions at will, but there8217;s no denying the fact that he will be a lot freer to do so now.

Almost immediately on his return from Bangalore, Vajpayee celebrated his freedom by bringing forth four ordinances, two of which related to economic reforms one on amending the Companies Bill to allow buyback of shares and to free inter-corporate investments, and the other to amend the Patents Bill to bring it in line with what the country has promised at the WTO. The fact that the ordinances had to be brought does show that legislative business will continue to be tricky in a coalition era.

What is heartening is thatthere is a broad agreement with the Congress on each of the ordinances. With the Insurance Bill now finally referred to the Standing Committee, it8217;s certain it will be passed in the budget session next month. FEMA has also been cleared by the concerned committee and should also be passed in the next session.

Investor confidence is of course a tricky thing, and could go away just as soon as it comes. If the BJP, for instance, reverts to its old swadeshi ways or goes slow on some critical reforms such as those on PSUs, the same FIIs which have invested Rs 300 crore in the last two days to take the sensex to a post-Pokharan high of 3398 today by October 22 it had fallen to 2741, could well revert to their earlier pessimism, and start pulling out as they did from the time of the nuclear test in May. From May till a week ago, they withdrew around Rs 3,000 crore of investment in the stock markets. Here8217;s hoping that Yashwant Sinha8217;s second budget is not seen as the kind of disaster that the last onewas.