Honesty is a terrifying proposition.

Share prices have been falling in the last few days and the Sensex is down some 60 points today although it is still at 20,790. Apparently this is because the Aam Aadmi Party or AAP has formed a government in Delhi which is giving away 20,000 liters of water free every month to every household and has reduced electricity rates by 50% only for those who consume up to 400 units a month. These populist policies have spooked the markets. " AAP has started on a wrong note, and if its surge continues, it could be a disaster for the economy and stock markets," said Deven Choksey, MD of KR Choksey Shares and Securities. " Markets are wary of AAP. The party must give a clear road map on how and why it will fight corruption. How is Kejriwal different from other popular governments." Exactly. In the downward race to national bankruptcy every party promises free goodies to bribe its perceived ' vote bank '. One party was handing out free color televisions, another promised free laptops, a third promised gold mangalsutras and all promised food grains almost free. States distributed free electricity to farmers leading to massive debts for the electricity companies, long periods of blackouts, destroying manufacturing activity, and gross waste of ground water as farmers ran pumps for unnecessarily long periods. However, nothing compares to the handouts that the Congress has been dishing out for the last 10 years to win elections. The MNREGA scheme, the Sixth Pay Commission, farmers' loan waiver, Backward Areas Grant, Food Security Bill and many others, costing the taxpayer tens of trillions of rupees. But no one was complaining. The stock market was zooming ever higher and the same fellows, who are moaning now, were gleefully predicting record territories. When Lehman Brothers failed markets all over the world crashed but, whereas other markets started to get back to pre-crisis levels towards the end of last year, the Sensex rebounded almost instantly in a V shaped recovery. The difference this time is not that the AAP is promising more populism, which it is, but that it is talking about zero tolerance to corruption. It is auditing books of the private sector electricity suppliers in Delhi who were given monopoly contracts by the previous Congress government. That is truly terrifying.