Congress is going to come to power again. It is good that they won by a near majority. At least we'll have a stable government. One also hopes coalition politics will be weaker as a consequence. For these two reasons, one hopes the government will do tolerably ok this time. A BJP victory might also have ratified the religious fundamentalists. So there are some reasons to cheer this victory. However, Congress is very populist in its policies. If its previous term is any indication then there are some serious concerns as the effect of their last set of policy measures will reflect during this term period. In spite of knowing the Congress mindset, I hope:
I hope the government takes the tough decision to raises indirect taxes to increase revenue to offset the already 8% and rising fiscal deficit. I also hope the government will slowly and subtly remove redundant subsidies and improve fiscal efficiency to reduce the deficit. In effect, I hope the government will try to fulfill the goals set by the Financial Responsibility and Budget Management Act, even though it has already failed to meet the time deadline.
I hope the deficit is controlled so that the debt-to-GDP ratio which is already at 60% does not increase further.
I hope reforms are implemented to increase the growth rate and thus offset the debt ratio. In particular: Labour law reform, privatization of banks and opening up of the retail and manufacturing sectors to FDI. Rural infrastructure must be developed too, but I don't know how the government will do that with such a high existing deficit. Using the huge RBI reserves is a contentious issue and may not go down well with the export community if the reserves are flooded into the market for infrastructure development.
Ultimately, I sincerely hope that mounting debt combined with economic slowdown do not lead to loss of public confidence, resulting in capital flight and culminating in a full-fledged macroeconomic crisis and hyperinflation! I know all this is much to hope for from the present government. But I think this is essential to continue to pull our country out of the clutches of poverty and push ahead on the path of welfare to all.
In the end, I wish our government good luck! :)