MARKET PERSPECTIVE

By J Mulraj

May 2-8, 2026, 2025

Some Changes Needed in Government Policies too, to Avoid a Repeat

Voter turnout in recent State elections was high, ranging from 74.8% in Tamil Nadu to a commendably high 84.5% in West Bengal, indicating a healthy interest in democracy and the felt need of change of non performing Governments. The BJP, ruling at the Centre, managed to displace Mamata Banerjee’s TMC in West Bengal. Alongwith it’s regional allies, BJP retained Assam. In Tamil Nadu both Dravidian parties were beaten by a new party, TVK, led by a movie star Vijay, though TVK did not get a majority.

So we will witness a political musical chairs for love of country (?) and lucre.  In Kerala it’s a coin toss between Congress led UDF and Left led LDF, the incumbent; UDF won. In the Union territory of Puducherry, the NDA, (BJP with alliance partners) retained it’s majority.

The effectiveness of a functioning democracy is in the peaceful transfer of power to those the electorate has bestowed a majority. Mamata Bannerjee has refused to accept the electoral verdict and so dented India’s democracy credentials.

The BJP should urgently address its serious issues well before April 2029 in order to avert an anti incumbency vote. The spread of it’s control allows it to do so, provided it has the political will, and the backbone, to do so. Some of the main structural issues include corruption, agonisingly slow judiciary, environment, education and preparedness for the coming technological change.

India has 36 States (28) and Union territories (8). The BJP and it’s allies govern in 22 of them ( Source: perplexity.ai). It has the political heft. It now needs foresight and gumption.

Let’s start with Environment. The image above shows the city of Dehra Doon in the year 2000 and again in 2026. The denudation of tree cover is obvious to everyone except those extremely myopic or Government officials whose souls have been sold to Mephistopheles for lucre. The God given natural resources have been neglected, because of awful public governance.

At the time of Independence, 1947, a National Forest Policy was formulated in 1952, setting a target of 33% land to be tree covered. Seventy four years later, the cover is 25%. Bengaluru was so tree covered, it was the inspiration for Lee Kyan Yew to reshape Singapore. Once called the ‘air conditioned city’, it is, today,, like Dehra Doon, shorn of trees, overbuilt, with traffic logjams and a hotter climate.

The reasons are many. Central Governments have no, sadly, developed water conservation. State Government politicians have, in order to win elections, promised free electricity to farmers, who then proceed to pump groundwater to irrigate (often over irrigate) their fields. Local authorities, not adept, nor concerned, with proper urban planning, allow indiscriminate construction at the cost of the environment.

Suggestion: Here’s an out of the box idea. Let aspiring politicians make whatever promises of freebies they want. They must, however, give an estimate of the cost of freebies pro the Election Commission, before the election, and pay, upfront, say 20% of the cost, upfront, from their/the party’s coffers. If elected, the State will bear the balance 80%, up until the estimate given to the EC is reached, upon which the freebies stop.

This would stanch the propensity of aspiring candidates to promise sops which are paid by the State and not themselves. And, also, introduce a modicum of fiscal responsibility.

Let’s consider corruption. One of the main reasons politicians seek under the table payment is for election funding. In this show-biz of democracy, politicians want crowds at their rallies. Even though they are rented (hence show-biz). Crowds need payment for attendance, logistics for travel and food for the belly. This costs. Once elected, politicos need cash as a reward for their efforts, and a way to whitewash it. The laundry is the tax exemption given to farmers, so politicians become farmers on paper. This must be tackled.

Suggestion: Exempt small farmers from tax. Tax the larger ones. Say, those earning Rs 30 lacs a year. Surely they can’t be called a small farmer if they earn more! They should then start paying tax. This would dilute the laundry impact. It would, for a politician trying to launder Rs 100 crores, be akin to an offer of free washing of a few underpants.

Judicial delays: The main causes are fewer judges/courts and a lackadaisical approach towards granting ‘adjournments’. The first needs to be urgently tackled in consultation with the judiciary. The leniency towards adjournments arises often because elected politicians with a criminal conviction wish it. This is because they can continue fighting elections until their appeal is finally decided by the Supreme Court. It is in their interest to delay justice.

About 46% of MPs have been convicted of a criminal offence (source: perplexity.ai).

Suggestion : Again, out of the box. Flip the thing around! Pass a law that MPs who are criminally convicted cannot stand for another term unless the conviction is overturned! Simultaneously, travck the count of the number of adjournments granted by judges; if they exceed 2 per case, stop his promotion until he is in compliance with the judiciaries own limit.

See how quickly the laxity in granting adjournments vanishes and the number of pending judicial cases drops below the horrendous 55 million now.

Restore true democracy, Mr Modi, you can do it with the electoral mandates now been bestowed upon you. If not you, who?

Last week the BSE Sensex closed at 77328, up 615 over the week.

Despite the Iran war, resulting in high oil prices and thus a larger current account deficit, despite a looming food shortage due to scarce fertiliser supply due to the stranglehold over the Strait of Hormuz, despite an expected El Niño impact which will further affect agro output, the stock market remains steady. Retail investors are pouring in money in equity mutual funds, committed by monthly payments into their systematic investment plans (SIPs). This is fuelling a continuation of the rally.

In USA just 5 stocks have contributed half the gain in the S&P 500 Index since April pointing to a dangerous concentration.

In the Iran war, the US blockade of all ships going to or from Iranian ports, enforced by 3 aircraft carrier groups and a strong air presence, is severely affecting evacuation of Iranian oil. Reportedly, some oil is being evacuated over land, to neighbouring Pakistan. This economic chokehold over Iran is Trump’s bet on capitulation by Iran. Trump desires some conclusion before his mid May summit meeting with Xi Jinping.

Meanwhile, in the other war, Russia v/s Ukraine, the Iran conflict has benefitted Russia majorly. Due to paucity of Gulf oil, Russia is raking it in, earning more than $ 2.5 billion a week as per some reports. Ukraine is benefitting too, though far less, in selling to Gulf nations, the expertise it has developed in asymmetrical warfare.

Given the challenges the Indian economy will face, it is advisable to consider lightening equity exposure, especially of underperforming shares.

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Comments may be sent to jmulraj@asiaconverge.com