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Over a span of five weeks, the Indian general elections with its 800 million eligible voters is set to provide a new leadership for the country. Three weeks into the elections, Norendra Modi of the BJP, hailed by many as a guarantor for economic prosperty, is a tough contender for Prime Minister. However, the outcome of the election is not clear. Polls represent mainly the say of an urban constituency and leave many of the rural population unaccounted for. This time, the Indian diaspora with its over ten million non-resident Indians, will have their say too. The transformation from political stability to economic performance and public sector efficiency remains the major task ahead, irrelevant of who the next Prime Minister will be. What is your opinion on the elections and the outlook for India?


Current elections are not too different from earlier ones. This time also more than 280 million illiterate adults will succumb to factors like region, religion and political gimmicks. Country's huge young population rather giving dividends is actually a burden on the democracy as they have still been exposed to words like human development index ,GDP and many others. The situation is further worsened by opposition parties who had let no stone unturned in manipulating the novice voters. There is a long way to go for the country like India.

I don't quite understand what you intend to convey through your piece. Firstly, it is clearly not just "illiterate adults" succumbing to region, religion etc. Even the most literate Indians from the metro cities believe deeply in such factors and vote on these lines (not always though). In fact, I think there's very good reason for Indians to vote on such lines, since, especially at local level, a lot of political favours depend on your caste, creed etc.

Secondly, could you please clarify the meaning of "Country's huge young population rather giving dividends is actually a burden on the democracy as they have still been exposed to words like human development index ,GDP and many others." If our youth have been exposed to such words, I think it's a massive welcome change. At least now some portion of electorate is talking directly about things which can propel the nation forward, instead of the same old parochial concerns.

My point is current elections are exactly the same or even worst than the previous ones. Change agents you mentioned in your paragraph are actually missing in the nation building process owing to non conducive environment.Furthermore people who are talking about change are actually reproducing the stuff written or spoken by few manipulative people and clearly defaulted on their own judgmental strength. . I agree that the we have made a significant process but it is still a prerogative of very few people. In democracy its the quantity not the quality that wins. Moreover i believe caste ,creed does not play any role in any intellectually strong society but to my regret such thing does not exist anywhere neither in developing countries nor in developed world.

We've seen periods of optimism leading up to national elections before. Like Pavan has said, this time may be more of the same. Confidence in the RBI and Rajan's move to tackle inflation has also contributed to this overly optimistic image of India. The Indian Rupee strengthened massively in the first quarter as investors sought yield combined with election/RBI confidence, but the bid is weak and investors are essentially picking up pennies in front of a steamroller for this carry. In addition, trends in the Indian bond market are disturbing as of late. We've seen the yield curve flip with the front end off to the races. The bond market is telling a different story than BBC headlines for India in 2014. Optimism is likely to fade after the elections and especially when new inflation data hits the wires. Although the RBI set out to cap inflation once and for all, they may have picked the worst possible time. Half the Indian CPI basket consists of food items and agriculture futures have seen some of the largest increases YTD in comparison to other asset classes.

In the last decade, India has been impacted with Center-Left economic policies with some entitlement programs, welfare economic policies on one hand, and privatization of PSU companies through sale of equity in open market on the other hand. There has been a clear departure investment promotion and job creation to sale of government holdings to private companies. As a result, India has moved from low fiscal deficit level of 2.54% achieved in 2007-08 to a high 4.1%. It in turn becomes a growing concern given the FRBM Act requires a fiscal deficit target of 3% to ensure sustainable growth. Inflation of 8%+ for over the last 5 years has almost destabilized the structure of the Indian economy. India is witnessing increasing wage pressure and low consumption rates set in & job creation has been the slowest over last 15 years led by low investment rate, slowdown in service and manufacturing sector growth. Given these conditions in the prevailing economy, the upcoming general elections of 2014 are seen with a lot of expectations from the future government. Recent polls are suggestive of a decisive mandate in favor of a center right political formation and after 10 years of center left political experience there is a good likelihood of a verdict in the coming general election in favor of center right reformist government. There will be a policy reset for sure and focus should shift towards inclusive growth and entitlement based polices, market based economic policies, high investment led bias and skills development to meet the aspiration of masses. After surprises from the US Federal Reserve about a delay in tapering and the shutdown, Indian markets have been quite resilient and are consolidating ahead of Elections 2014. It is unusual for Indian markets to take a leap in pre-election months, particularly after 1996 when coalitions became the new political strategy to make up for shortfalls in parliamentary majority. Infact, in the general elections of 2004, the markets went down by 10% before the elections. The last time BJP led National Democratic Alliance (NDA)came to power in 1999, market responded well in the three months before the elections (the Sensex jumped nearly 17 percent) as also in the three months following the elections (the Sensex jumped another 6.4 percent). It however was not a long run as the Sensex dropped about 13% within a year. With opinion polls favoring the BJP-led National Democratic Alliance the markets may react in a positive way. investors seem excited with expectations that the BJP will form the next government with Narendra Modi as the prime minister and hope he will give priority to development by reforming policies and governance. The present rally in the Indian stock market may not continue for long and is more likely to move sideways. Political uncertainty is high. But if the BJP comes to power, the Sensex is bound to jump with enough support coming from foreign institutional investors.

There is no doubt that the General Elections of 2014 hold the key to a better future for India and its trading partners. The recent elections have seen significant changes that were much awaited and have been widely supported by the youth. Yes, I am hinting at the rise of AAP (Aam Aadmi Party). Though AAP being a recent phenomenon is unlikely to create a massive impact, it hints at the genesis of a transformation – a move away from a corrupt political setup which was a transformation we waited for a long time. The movement has been particularly welcome by the urban youth who has supported AAP’s initiatives on several occasions. But with the recent incapacity produced by the party in Delhi, it has left its own doubts in the minds of the people regarding how strong its leadership is for driving a change transformation. The resurgent BJP with its charismatic prime ministerial candidate Mr. Narendra Modi has certainly got the markets thinking on a positive note and the recent appreciation of Indian Rupee against Dollar is partly attributable to the positive vibe propagated by the expected NDA government formation at the centre which stands for an inclusive growth of India along with the creation of better employment opportunities. The Indian National Congress on the other hand seems to have lost its edge with the party being neck-deep in corruption. However, what many of us know is clearly the opinions of the urban India, which contributes only a fraction to the total vote counts. One still needs to be cognizant about the opinion of the rural India, what their needs are and which party they believe is the most suitable for guaranteeing them a better future. Are the campaigns by the major political parties reaching the rural masses and are the interpreting the messages the same way as we are? Perhaps the answer will be available only by the end of the election process.

Even though India had plenty of elections in the past, it still strikes me with awe that so many people can exercise a fundamental right, that of determining the future government of their country. From the conversations I've had in recent days I know others share this sentiment. The same conversations also point to mixed views on what type of prime minister Mr Modi will be. The Indian commentators that I've read are divided on this matter. Do we have any sense of what type of policies Mr Modi is likely to implement, if elected? What practical as well as constitutional constraints would he face? I would be very interested in reading your answers to these questions.

Pro-industry would be too narrow a term to describe Mr. Modi's governance model. In my opinion, Modi's presence will attract foreign institutional investors in large numbers. Personally I do not feel there is a great difference between the BJP and the Congress in terms of corruption. So, Mr. Modi will definitely be under the pressure of delivering his promises - of creating more jobs for the youth, empowering the rural population through targeted government grants and building an investor friendly environment. And it is likely that he will continue facing opposition in light of the Gujarat riots. But if Mr. Modi delivers, it would be interesting to see which version will the public remember, the Modi for prosperity or the Modi for destruction. My prediction is the former.

However, what one also needs to look at is - what kind of leader will Mr. Rahul Gandhi be as the leader of the opposition. Historically, India has been a nation of proposals and counter proposals from the party/alliance in power and opposition respectively. This needs to stop. Along with the other transformations, it is also equally important for the opposition to be mature and support the party in power in their positive moves. The Congress has a lot of holes to fill-in, and there are other ways than forming a blind opposition block to every move of the party in power to restore their credibility, they'll have to understand that. Only then, will a matured governance become a reality.

As I mentioned in my previous reply, in case the center right reformist government led by Mr. Modi comes to power, there will be a focus shift towards market based economic policies, high investment led bias and development of skills of the masses. Indian economic growth has slowed down to less than a 5% while consumer inflation is nearing the 10 percent level and foreign investments in the country have been falling which has now become a growing concern. Mr. Narendra Modi, in his own state, has attempted to boost certain specific sectors in the last decade and I believe he would try to apply the same success story if he becomes the Prime Minister. The road network in Gujarat is among the best managed networks in India according to World Bank report 2010. Hence, infrastructure especially the roads would be a key thrust area. This would require development of a national fund to finance road development. One of the major achievements of Mr. Modi’s government has been on the power front with solutions like separate transmission line for farms which led to substantial improvement in Power scenario of Gujarat. Providing power 24*7 to rural as well as urban areas over the next 5 years would be one of the key policies of the BJP government as power deficit has been lately a major constraint towards a sustainable growth. The last time National Democratic Alliance (NDA) came to power; there was a major divestment of the Public sector companies. However, Mr. Modi implicated a decentralised administration model for PSU’s in Gujarat and government was to look only at big investment decisions. It is highly probable that decentralisation is seen in PSU manufacturing units and banks where the operational decisions can be more autonomous and loss making PSU could have an opportunity to restructure themselves or seek a strategic investment. Lately there is a realization among the top economic leaders in BJP that high political interference and crony capitalism has been responsible for high build up in stress in Bank assets therefore PSU Banks could be forced to be more efficient in their use of capital by seeking a mix of government support and raising of capital from the open market. Hence it would not be surprising to see strong banks like State Bank of India, Punjab National Bank and Bank of Baroda to go for raising money from open market, some of the smaller banks with weak balance sheets would likely be merged with larger stronger PSU Banks while some of the smaller banks with regional presence with relatively strong balance sheet and capital adequacy ratio can expect budgetary support. Overall, Investment from institutional investors will be the key as policy leaders in BJP have been generally appreciated China’s investment led growth given India’s deficient infrastructure a clear focus on Investment may be just the right step. In its last term, NDA government was about to deregulate petrol and diesel from government control, however was not successful. With the current scenario in the World energy markets government can achieve deregulation with ease and a push towards market based price discovery could be well seen but within a regulatory framework. Abrogating the entitlement schemes already passed which can further surge the fiscal deficit would lead to a huge political pressure, instead the terms of few schemes like MNREGA’s could be changed with focus shifting from Job security to skill development. The only risk that seems viable is that NDA government is known to pursue right economic policies, but it does not go far enough hamstrung as it does with its coalition partners. Apart from this, Mr. Modi’s silence regarding the India’s foreign policy throughout the election campaign period also is a sign of concern but it is quite obvious that BJP would be practically following the foreign policy as practised by Congress, i.e. to enjoy trade with the stronger nations.

The elections this time have garnered interest of Indians living in the country as well as abroad. With the emergence of new political party, Aam Admi Party (AAP) and elimination of corruption its main motto, the party has definitely enticed youth of the country. On the other hand, Narendra Modi is undoubtedly a strong contender for the highest position in the country because of his charisma and past track record of development in Gujarat. Overall, the mood is optimistic with large number of youths supporting different parties as can be seen from political rallies and increasing turnout as compared to previous elections.

Narendra Modi has been appreciated for his so called “Gujarat Model of Development”. Although the model has been widely hailed, there is no clear cut consensus on the results of the model. Some fractions have supported the model, while others have termed it as “toffee” model. I believe it will be difficult to replicate the Gujarat phenomenon throughout the country as each state has its own set of problems, which does not call for “one size fits all” solution. There has to be mix and match of different models which can produce efficient results. One central model of development will never work. Several reports show that some states have done better than Gujarat on some aspects. Therefore, states have to learn from each other’s successes and failures.

Furthermore, I believe Mr Modi will face the similar issues while implementing policies as faced by the previous government (UPA-2), since it is hard to imagine a single party winning majority of the votes. Several pre-polls have shown that BJP is likely to get major chunk of votes, however, they would still need support from other parties. The past three governments (NDA & UPA) have all been formed in coalition with regional parties. Recently, leaders of regional parties such as Mamta Banerjee (Trinamool Congress) and Sharad Pawar (NCP) have openly attacked Mr Modi. It would be interesting to see how Mr Modi would be able to get regional parties on board, if at all such a situation arises. However, irrespective of who becomes the next Prime Minister, the strategy of the government would still be focused on bringing foreign investment, stabilizing the Indian currency, initiating key economic reforms and gaining investor confidence.

The two immediate challenges that India faces are Infrastructural inadequacies and Income inequalities. What would Modi do to address these two‘I’s?
Modi is often praised for his infrastructural developments in Gujarat, which faces hardly any electricity shortages. This is still a dream in some states where businesses are heavily hit by generator costs, and many have closed down. Some rural areas in India hardly get any electricity and plumbing is, of course, a dream. However, his approach to this: ‘free groundwater’ and ‘subsidized electricity’ and has been criticized by the UN as highly unsustainable.
16% of children in India are ‘wasted’ according to UNICEF’s malnutrition statistics, and India has 1 in 3 of the world’s children who suffer from malnutrition. The lost potential and suffering of 25% of the below-poverty-line populace is an immediate issue that needs to be addressed. The BJP will not implement the Food Security bill of the Congress, and seeks to grow organically out of poverty. While this looks good on paper, and cuts down government debt and expenditure, the short-term needs of disastrous suffering and the question of inclusive growth are unaddressed.
To conclude a brief (inadequate) analysis, the general prediction is that of a coalition government at the Centre, (with the BJP and local heavyweights), and this will make the ‘toughman’ Modi a more muted figure in reality when he assumes power.