This time, the exit polls were accurate and the pollsters precise. Even the margin of victory was well forecast. However, lack of faith in the electorate and fear of another coalition government meant that no one wanted to commence celebrations early. India was wary, after being through six governments, three elections, as well as nuclear blasts, sanctions and the Kargil conflict, all in less than four years.

Let the NDA, the winning coalition not be lulled into complacency by the spontaneous welcome. It is an invitation to take on hard task that lies ahead. While sentiment is positive, latest data indicates that all may not bewell with the economy. The economy is slowing after a jumpstart in the first quarter of the current fiscal. In mid-July, I had given data across a broad range of parameters (agriculture & industrial production, exports, tax revenues and capital flows), all at their best levels in many years. A comparison today reveals deterioration, which is equally broad and consistent.

The recovery (?) driven primarily by consumption driven rural demand (following the record Rabi crop) is in danger of petering out unless reinforced quickly by investment or urban consumer demand. The mood is optimistic, but, without an impetus, it will not last.

An equally significant problem lies in the fiscal deficit, careening out of control. The lack of a stable government led to a general lack of restrain and financial discipline and delays in administrative price hikes. Combined with the costs of Kargil (Rs 50 billion) and elections (Rs 10 billion) there will be overshoot. Expenditure could exceed the budgeted amount by 30 percent. Tax revenues too are not growing as hoped. The need for monetary and fiscal stimulus to sustain growth will need to be balanced by an attempt to rein in the fiscal deficit.

Unfortunately, the government itself made the reduction of budget deficit to an unrealistic 4 per cent of GDP one of its primary economic objectives. And investors use this measure to evaluate performance, irrespective of whether it is appropriate in the current context or not.

The other issue is that of politics within a coalition. Bharatiya Janata Party (BJP), the main party, has barely increased its presence while its coalition partners, a motley amalgam of 23 regional and socialist parties hold 40 per cent of the coalition's seats. While it is difficult for another party to challenge BJP for forming the government, BJP's own majority remains thin. India's past experience with coalitions has been poor. Not only are coalitions unable to take difficult decisions or structural reform steps, they concentrate on narrow, regionalagendas. Some coalition partners have already made noises about "roll-back" of the diesel price hike.

Hopefully, these will not detract the ruling party from their endeavours. Few expect that even the new government will last its full term. But most hope it will survive long enough to implement needed reforms.

The NDA had announced an ambitious manifesto before the election, which made for boring reading swathed as it was in generalities & verbosity. There was no clearly defined path or any mention of "How to achieve?" the goals they set for themselves. Surprisingly, there was a sharp convergence with the agenda of the Congress (same ghost-writer?). There was a broad agreement in terms of recognising the changing times and needs of the country, the importance of foreign capital & technology, the necessity to continue reforms as well as reduce and simplify rules and bureaucracy.

The next 100 days are critical. Expectations are high. Strong recovery has already started in SE Asia. The NDA has set thedirection, now they need to set the pace. Delivery is critical before disenchantment sets in.

(The author is head, treasury marketing in a leading foreign bank. The views in the above article are his own and not that of his organisation.)