FinanceAsia Magazine

Issue: April 2014

India’s election fever

As the world’s largest democracy goes to the polls the health of India’s economy hangs in the balance.

Fed up with widespread corruption and stagflation, polls suggest that Indians will oust the incumbent Indian National Congress (INC), a party that has held power for a decade, and will turn in droves to the opposition Bharatiya
Janata Party (BJP), which is promising reform.

FinanceAsia backs the BJP because its policies seem to be more in line with the economy’s needs.

The BJP’s manifesto vows to invest in infrastructure and review stringent labour laws. It also outlines measures to tackle rampant food inflation.

While the INC also pledges infrastructure
investment, its credibility is undermined by a
pledge to hike benefits ranging from healthcare
to housing. India may not be able to afford such
largesse after the longest economic slowdown
since the 1980s and the result could be a delay in interest rate cuts.

We are mindful that manifestos can be idealistic and much depends on implementation. To be sure, the economy’s structural problems will take time to correct and the winner may have to depend on the support of coalition partners less enthusiastic about reform.

So markets may be getting ahead of themselves: shares are trading around record highs and the rupee has strengthened against major currencies. As pollsters predicted a BJP win a net $83.83 million flowed into Indian funds during March, after 23 months’ worth of outflows since February last year according to data provider EPFR.

As a harbinger of the kind of sops to vested interests, haggling and horse-trading that may lie ahead; the BJP said in early April that it would ban foreign supermarkets from entering India’s retail sector, a move which protect its supporters among small shopkeepers.

The election kicked off in early April and will continue until mid May as about 815 million people register their opinion.

A month is a very long time in politics — exuberance should be held in check.

 

 

About FinanceAsia Magazine

Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.

Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.

Our regular sections include:

Data Story
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.

Greenshoe
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.

Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.

Investor Dialogue
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.

Soapbox
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.

People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.

Deal Tracker
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.

The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.

 

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