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 Date:4/21/2009

 

World News
India ‘09
With elections dominating country politics, some believe the outcome could be a major driver of stocks, TC Malhotra reports.

At a time when the world is facing a difficult economic year as the global financial crisis continues, India, the world's largest democracy, is holding its 15th parliamentary elections.

Some leading economists believe that the result of the elections would be a more important factor to decide the future of Indian economy and the stock market than corporate balance sheets. A recent investor survey conducted by global financial services firm Morgan Stanley reveals that the results of the general elections would be the second most important driver for the Indian stocks in 2009, after the global market trends.

Experts also agreed that the general elections, which will involve an estimated investment of Rs 100 billion ($2 billion) "could be a major catalyst, especially if the winning coalition is business friendly and can step up economic reforms."

Most of the political analysts, experts and pundits are of the view that India is again moving toward another coalition government as neither of the two major political parties, Congress or Hindu right-wing Bhartiya Janata Party (BJP) expects to get a majority in the elections, with the Third Front also not winning a majority position.

Political experts say that any one of three results is possible. The winner could be a coalition headed by the Congress, a coalition headed by the BJP or a Third Front featuring neither.

Prime Minister Manmohan Singh, a quiet, uncharismatic economist credited with kick-starting India's development but who has also taken the country into a closer alignment with the U.S., is again the Congress party’s prime ministerial candidate, while L K Advani is the BJP's prime ministerial candidate. No leader is being offered as prime ministerial candidate by the Third Front.

Previous experience suggests that if Congress-led United Progressive Alliance (UPA) again comes to power, Manmohan Singh will continue the liberal economy policies and India will have more close ties with the Obama led U.S. government.

The BJP-led National Democratic Alliance (NDA) also favours economic reforms and has good ties with the United States, but a win for NDA could mean changes in foreign policy. On the opposite end, the left-dominated Third Front, a leftist grouping with 10 like-minded parties, has already shown their anger over close Indo-US relations.

When the election process ends and the next government forms before June 2, one thing is certain: It will be a tough job maintaining the balance between the country's economic growth and the basic needs of the 40 percent of Indians, who live below the World Bank poverty line of less than $2 a day.

Both the main rivals, UPA and NDA, has made long list of promises to woo the voters. Singh says, "Give us 10 years, and we will double the standard of living of the people.”

India enjoyed an average 9 percent growth rate during the tenure of Singh, who opened the Indian economy in the early 1990s. But experts believe this growth rate will now be difficult for any government to maintain under an ongoing crisis and they warn that the next government may have to choose their measure more carefully. However, the India economy has shown resilience during this global crisis and the ruling party Congress claims the credit for that. In its election manifesto the party says that the Indian National Congress is fully aware that the world economy faces the worst crisis in 50 years.

L K Advani said if the BJP-led National Democratic Alliance (NDA) wins, IT will be the tool for advancement. "If the country gives us a chance in 2009, we will ensure that IT would be used as an important tool to change our educational, economic, health and social sectors," Advani told the media in New Delhi.

The voting process to elect new 545 lawmakers to reach the Lok Sabha, the lower house of parliament, will run in five phases and end May 13. The term of the current United Progressive Alliance (UPA) government led by Prime Minister Manmohan Singh ends in mid-May.

According to estimates provided by India's Election Commission, some 714 million eligible voters will cast their ballots to elect the new Indian federal government. In India elected candidates of different political parties have constitutional power to form coalitions to create a voting majority. From the biggest coalition or party, the Lok Sabha chooses a prime minister. In India, the prime minister does many of the same tasks as the president of the United States, and works with the Council of Ministers to govern the country.

As per the figures provided by the federal government, across India's 28 states and seven "union territories" there will be 800,000 polling stations and 1,368,430 electronic voting machines ready to receive voters, while a predicted two million security personnel try to maintain order.

Indian National Congress party has ruled the country for more than 45 years, while other political parties including BJP, Left parties and many small regional political parties has shared the power as an alliance to the ruling party because since the last one decade of so no single party has succeeded to get majority at its own in general elections and coalitions dominated by like minded political parties have held the power.