Investors have had much reason to be chagrined with the BJP-led government. The Government has been perceived to be one which has not performed satisfactorily. And even this columnist had pointed out that soon a time will come when the BJP will be asked to either perform or pack up and go. The second budget is soon due. The maiden budget of the government was just an attempt to please everyone. There was no attempt whatsoever to give a direction to the economy through the budget.

Everyone started suspecting that this government did not know how to go about its business. Agreed that getting into a workable equation with the bureaucracy and trying to run a coalition government was astrenous affair. But be that as it may, there can be no running away from the urgent need for the government to produce results.

Apart from the economic scene, recent happenings in the socio-political scene have only added to the sinking feeling for the investor. Issues which were far removed from the core problems, were increasingly getting more attention. And one suspected that the BJP continued its image-building campaign, now that it had no results to show.

Anxious investors had no choice but to look for the next budget to figure out the government's game plan. That alone will reveal the resolve of the government as to which way it is headed. But investors can heave a sigh for some positive signals have started emerging even before the budget. These signals indicate that the government is now slowly but surely getting closer to real governing.

Take the recently announced 11 per cent hike in urea price from Rs 3,600 per tonne to Rs 4,000 per tonne. Investors will recall how the finance ministerwas frustrated on this score in the last budget. Much water has flown under the bridge since then. The BJP cadres have now come to realise that one cannot evade fundamental issues. The learning curve has begun, though agonisingly slow and costly for the nation.

And Sinha appears to have become more resolute. Earlier, he had lamented that he could not proceed with reforms without a political consensus in a democratic set up. But faced with a situation where the country could drift to a situation like 1991-92, he is now pushing through some badly overdue reforms.

Jacking up the price of PDS rice, wheat and sugar is another sign of this resolve, and that is good for the stock markets. The food subsidy bill has been a whopping Rs 9,000 crore for 1998-99. With industrial growth having slowed down to 3.1 per cent, there is no way the finance minister can look forward to a buoyancy in tax revenues in the immediate horizon. This has been the immediate trigger for the hike in PDS prices. The government haslearnt not to be scared of ghosts of objection. But all said and done, this government is still learning the ropes. The draft five-year plan is ready and will go for approval in February. But it is already clear that there is a wide gap between the plan assumptions and what can be achieved based on ground realities. Lack of experience, professionalism and maturity is all there for everyone to see, as the government goes blundering about its task of running the nation.

In any case, the investor should feel happy with the first signs that the government is willing to learn. The resolve to close down eight unviable PSU units is another signal. But apart from the dawning of realisation of ground realities, the methods of the present Government are still ad hoc. Look at the means adopted to curb fiscal deficit. The buyback proposal for the PSU shares is certainly innovative. But treating realisation from selling of PSU shares as revenue is nothing but a measure of convenience and adhoc approach.

Again, takethe proposal to roll back the administered price mechanism for petro product prices. Faced with revenue shortage, a well planned move to liberate the petroleum sector is being rolled back. While one can sympathise with the Government for its compulsions, the tendency to depart from long range planning does not bode well for the future.

Investors, especially overseas ones, cannot be too happy about such developments. And such tendencies have continued from the past. The bonanza given to the central government employees over and above what was recommended by the Pay Commission has now started telling on both state and central government budgets and will be an enduring burden. Yet when the United Front government decided to do this under the leadership of a communist home minister, no one dared to speak against it for fear of offending vote banks. This populist politics is certainly a no-no for the investor, but continues unabated.

The World Bank has already withdrawn its support for power projects,wherever a state government has failed to undertake reform in the power sector in the state electricity boards or in terms of tariffs being charged to various sections. The central government has not been able to force the state governments to press ahead with reforms in this area. If anything, and if the goings on between the BJP and Shiv Sena in Maharashtra are any indication, the government is going back on reforms.

These are perhaps growing pains, but the necessity to reach a crisis point before the government gets serious is worrying. Vajpayee seriously lacks able lieutenants who can guide and help him in running the state. In fact, this has forced him to overcome the limitations of the present government structure by taking initiatives on his own. In the Ninth Plan document, he has made amends to accommodate an additional Rs 17,456 crore for social sectors and Rs 4,440 crore for core sectors. This is over and above the amounts allotted in the original plan. Naturally, these proposals have led to acutback in the allocation for other sectors.

Clearly, the BJP government is like an octopus pulling in different and often opposite directions at the same time with Sinha trying to balance the budget, the RSS units and hawks carrying on their own agenda, and Montek Singh, Jaswant Singh, NK Singh, the PMO office also having their own agenda. Not a very inspiring picture. But despite these contradictions, the Government is coming to grips with pragmatic economic policies, though through adhoc measures. It is also able to overrule the hawks. That Kushabhau Thakare will lead the fast at Delhi for atonement could well signal that BJP has climbed an important step in the ladder to maturity. But as far as the investor is concerned, the best way to atone is for the BJP to get even more grit and ensure that the nation does not go back on the reform process in principle and content.

The stock markets have certainly taken note of these undercurrents and have kept the Sensex buoyed. Market players may come to lookfor better days and that should keep the Sensex inching northwards.