The Hindu Business Line : Has Jaswant brought in the feel-good factor?

Braving the scorching heat through powerless and waterless days and nights, many in the North, especially in the Capital, may not have felt it. But if the Prime Minister, Mr Atal Bihari Vajpayee, and the week-old Finance Minister, Mr Jaswant Singh, say the "feel-good" factor is back, it must be.

In fact, corroborating the return of the "feel good" factor was the FICCI President, Mr R.S. Lodha, who at the meeting of the Prime Minister's Trade and Industry Advisory Council last Wednesday noted that he could feel it in the air even when he was in Chennai a few days earlier.

What exactly is this "feel-good" factor, a catchy phrase coined a couple of Budgets ago by the erstwhile Finance Minister, Mr Yashwant Sinha?

Is it the satisfaction derived from the strong fundamentals of the economy — a GDP growth of 5.4 per cent and expected to grow beyond six per cent, the unprecedented price stability with inflation at around two per cent along with the never-before bulge in forex reserves at $58 billion.

Perhaps not. For, these healthy economic parameters were known last month too, but the "feel-good" factor was strangely missing.

Come to think of it, it's ironical that the factor ushered itself in when the two gentlemen — Mr Yashwant Sinha and Mr Jaswant Singh — walked across the street on Raisina Hill to swap places following the Cabinet reshuffle. Ironical again, that it was Mr Sinha's own phrase that boomeranged on him.

True, the "feel-good" factor was definitely in the air when the new Finance Minister proclaimed that "there should be more money in his (the citizen's) pocket and more money in the housewife's purse". After all, who does not like more money jingling in the pockets?

The "feel-good" factor then, has more to do with the state of the mind, of optimistic expectations, the hope of rosier days ahead.

A single statement by the new "friendly neighbourhood" Minister — endearingly being called Jas and Jassi already — has, over the week, created an atmosphere of expectations. The ardent hope of the salaried, the middle-class and pensioners veered round tax breaks, restoration of tax rebates in designated savings and re-tinkering with the small savings schemes. These hopes have since been "officially" scotched, at least for the near term.

Frankly, it's a tightrope walk for the new Finance Minister. Any re-tinkering to restore some of the sops will necessitate relevant amendments to the Income-Tax Bill and any attempt to do so mid-year may well be derided as populist by certain sections of the Opposition, more so when many within the BJP hold the view that it was the "harsh" measures in the Budget which led to the defeat of the party in the Delhi polls.

On the contrary, if the "feel-good" factor is to be sustained, Mr Singh will have to deliver at the earliest some "goodies" in keeping with the expectations. For the simple reason that the difference between the "feel good" factor and the "feel bad" factor is wafer thin.

What then does the Finance Minister do? Mr Singh has also gone on record hinting that people need to spend more on consumer items. "Unless consumers consume, how can the economy expand," he said soon after the Wednesday meeting. This may well point to a lowering of the excise duty slabs on select consumer goods, including white goods and automobiles, which can be effected through a mere notification.

Cheaper consumer goods can well be a bait to drive demand and boost sales. But then, it takes two to tango. The industry will have to respond to the lowering of excise duty by passing on the benefits to the consumer. During Mr Sinha's tenure as Finance Minister, some sections of the industry, automobiles for instance, did not and pocketed the booty instead.

And in such temptations, there's never a last time.

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