To answer that question, we need to take a look at why a stable government is important for the economy. At first glance, it doesn't look all that important. The health of one important section of the economy, information technology, doesn't depend on the Indian economy at all. Its fortunes are more bound up with the US economy than anything else. So also the fate of several of the so-called knowledge industries. The performance of companies such as Dr Reddy's or Ranbaxy can hardly be linked to government policy. Their prospects are now linked to the world market, and to exploiting India's competitive advantage in research. Indian competitive advantage is also the focus for IT companies, and changes of government will not affect it significantly. In any case, the government has already freed the IT sector to such an extent that they hardly have any demands waiting to be fulfilled. Governments may come and governments may go, but the march of the Indian knowledge industry goes on.

What about the cyclicals? Besides the new-found enthusiasm for knowledge the other major theme in the stockmarkets has been the industrial recovery. Would this have been jeopardised by a weak government? Unlikely, because the reasons for the rebound had little to do with government policy. The chief cause of the revival is the growth in rural demand, on the basis of bumper harvests. To be sure, higher procurement prices have also helped, but this year's procurement prices have already been announced. The rural demand story has more to do with favourable monsoons than a favourable government. Moreover, all the indicators of rural demand are already firmly in place. Motorcycle sales, offtake of cement in rural areas, tractor sales et al show that rural spending power has already filtered into the economy, riding on the back of a bumper kharif and rabi crop.

The other source of demand is exports. The story here has been that with the revival of economies in Western Europe, Japan and especially the ravaged economies of south-east and east Asia, their imports from India too would rise. Exports to south-east and east Asia have fallen drastically after the meltdown in those countries, and a revival there would undoubtedly lead to higher exports from India. This again is something which has nothing to do with the government. It is purely and simply a function of demand rising in those countries, and, to some extent, of the fact that their currencies have appreciated from the rock bottom levels which they had touched at one time. That will help Indian goods become more competitive vis-a-vis exports from south-east Asian countries.

There are several indications that an industrial recovery is underway. The Index of Industrial Production has been firming up and has registered a growth of 5.6 per cent in the first quarter of the year. The growth in non-food credit (including investment in corporate paper) is much higher than what it was during the comparable period of 1998. Although the rate of growth has slowed in September, that may well have been on account of a slowing of activity due to the elections. Excise collections have shown an increase of 20 per cent in the first half of the year. And although non-POL imports were down 4.1 per cent during the April to August period, that's an improvement over the 6.1 per cent lower figure for the April to July period.

Add to this the fact that the first half results of companies are also expected to be good. S&P has already preferred India to China as an investment destination, and that happened much before the elections.

So the improvement in the economy this year is already on the cards, government or no government. In fact the fall of the last government had precious little impact on the recovery process under way.

So why the euphoria over the stable government? For two reasons. First, there's a build up of expectations that some of the bills which have been piling up can now be passed. The insurance bill, the bill on cyberlaws, and clearing up the telecom tangle come readily to mind. Getting these bills cleared helps tremendously in the sense that it will end the uncertainty surrounding these areas, and will enable corporates to go ahead with their investment plans, reinforcing the economic recovery. Everybody knows of the foreign corporates who have been waiting here for years in the expectation of the IRA bill getting passed, and they could start getting in their investments immediately. Similarly the passing of the cyberlaws will almost immediately result in investment in e-commerce. The question is, will the Congress majority in the Rajya Sabha allow these bills to be passed?

The second reason is that the government may not have the capacity to do anything terribly positive, it can well scuttle a recovery. That's because it badly needs to invest in infrastructure, and it can't do that unless it shifts spending from unproductive areas to investment. Unless the government gets its fiscal deficit down, for example, an economic recovery may well send interest rates up again, threatening to abort a recovery.

But both the good or the ill that the government can do is well in the future, and the effects will not be felt for some time. Till then, enjoy the bull run.