The Hindu Business Line : Forget the cause - `feel good' factor is back

LIKE bright sunshine after the chill and the fog, the `feel good' factor is back, after a long recess(ion). Quiz any corporate on this and the honcho will confirm that it is back in the air.

"Things look brighter, the despondence has gone. There's optimism in the air" they will say. Quiz them further on what they think has ushered in the `feel good' factor back yet again, and you will find that there are wide differences in perception.

Confirming its return while being forthright in his views on what brought about this welcome change is Mr K.N. Memani of Ernst & Young India. "Yes, the feel good factor is definitely back again and, I hope, this time to stay for a longer period. Almost, all the corporates that I meet and talk to, on a daily basis, confirm this pretty recent development," he says, in an informal chat with Business Line.

But what is it that has changed on the ground that in just over a month's time, indifference and despondence has made way for optimism and fresh cheer.

"It's the outcome of the Gujarat elections," says Mr Memani. And, perhaps noticing a raised eyebrow, is quick to add: "Here, I am not talking about the principles or the strategy on the basis of which the polls were contested in the State. I am referring to the final outcome, the landslide victory for the BJP which has meant a great deal for the `comfort' levels of the ruling coalition at the Centre."

Mr Memani should know. As the Chairman of one of the top management consultancy firms in the country, he knows the pulse of the corporate sector.

"The thumping victory," Mr Memani says "has ushered in political stability at the Centre, and with it, the feel good factor is back in the air for corporates."

Remember, that even before the Gujarat elections, certain core sectors such as cement and steel, and their allied industries had been doing well, thanks mainly to the national highway projects underway. The country's forex reserves have been going from strength to strength. Exports too, were doing well and inflation has never been a problem in recent times. But even then, there was an air of uncertainty. "And, that was mainly over the political fortunes of the parties in the fray in Gujarat."

"Imagine, for a moment, the repercussions, had the BJP lost in the State. The ripple effect would have been a deafening roar in Delhi as the Opposition would then have certainly demanded that the Prime Minister, Mr Atal Bihari Vajpayee, should step down as he has no moral authority to rule. With the BJP's victory, that cloud of uncertainty has vanished and corporates can look forward to a period of stability at the Centre."

Agreeing with Mr Memani, as far as the return of the feel good factor is concerned, is Mr J. Mehra, Director of the Essar group. But his view on the reasons is different.

Although he concedes that the poll results may have played a part, he is firmly of the opinion that it is consumerism that has more to do with the phenomenon.

"Indians," he says, "earlier used to splurge only when on visits abroad. Now-a-days, the young generation has started splurging even back at home. There's a tremendous boom in consumerism, which is visible more now than ever before."

Whatever be the perception about the cause, the good news is that the FG factor is back.

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