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Journalism of Courage
Those alarmed by the frenetic anti-gravity tendency the Sensex is displaying now 8212; it hit 18,000 yesterday and recorded a huge one-day jump 8212; are forgetting two things. First, stock markets are like that only.
Assuming there is no scam 8212; and no one has hinted at one, neither has there been rumours so far 8212; it is pointless to demand 8216;rational8217; exuberance in stock markets. Speculation, a dirty word for many
It is the second attribute of the Sensex8217;s current rise that is more interesting 8212; the market seems to have taken political instability at the Centre in its stride. Think about it. If anyone had predicted in 2004 that in three years8217; time the Sensex will undertake a vertiginous climb while the government is all but abandoned by a key ally, he or she would have been laughed out of the country. In May 2004, A.B. Bardhan comments on economic policy took the life out of the Sensex. In October 2007, Prakash Karat8217;s far more definitive critiques have been seemingly absorbed. If and when the Congress and the CPM part ways, and the country is finally told that they acknowledge their mutual incompatibility, it is not beyond the realms of possibility that, minus some other shock, the stock market may not collapse on receiving the news.
Why is this a good thing?
Because it indicates that markets have realised that the sarkar doesn8217;t have the last or the biggest word on finance or the economy. It is a sign of the fair distance the Indian economic system has travelled. It is also a vote for the country8217;s political maturity 8212; this government may go, another will come, and odds are no government will advocate a return to Indian socialism. What about policy stasis? Well, there has been so little policy movement under the UPA that it would be somewhat irrational to expect the market to get depressed now. That is one inference the next government, whatever its composition, should take seriously.
