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Market Update

Modi Captivates Youth and Business Community in India

Author: Arjun Dave
Last Update: 12:13 PM ET April 25 2014

Parliament elections are in full swings in India where 60% of eligible voters are expected to cast ballots in a month long election that is scheduled to end on May 14.

This is the second in a three-article series created with the help of staff at 123jump.com and Ticker.com.

Indiaís national elections always draw worldwide media attention simply because of the sheer complexity but these time three leading candidates are also making headlines.

India has 81.5 crore or 815 million registered voters and nearly 10 crore or 100 million are eligible to vote for the first time.

For more than six decades people in India cast their votes but rarely managed to get much in return when it came to governance, development and access to basic utilities.

Though India remains one of the poorest nations in the world, voters in India are not shy in throwing out governments when they fail to deliver. India has gone through several change of governments in the last three decades and all brought about through peaceful election process.

Voters appear to be in a mood for another change this time in Lok Sabha election.

Analysts have been quick to link the current voter mood to the slowing economy and on the growing dysfunction in the ruling coalition led by the Congress Party. However, there are other reasons that are bubbling up in the maturing democracy that is now sixty seven years old.

For decades, people in India were told that the vast and diverse nationís economy canít grow faster than 3% and its large population is a burden to economic development. Voters accepted for decades the slow infrastructure development and virtually no support for healthcare, education and high unemployment rates.

But in the current election three distinct group of leaders are offering different visions of India - village development, rapid urbanization and anti-corruption.

BJP Wants Rapid Urbanization

Bhartiya Janata Party, the only other national party, last governed India for a full-term of five years that ended in 2004 and was voted out of power. BJP lost seats and suffered a surprise and humiliating defeat in the Lok Sabha election despite delivering sustained annual economic growth of more than 7%.

The party in its previous incarnations was a part of a governing coalition two times in the late seventies and nineties. The party has significantly changed its economic policy in the last three decades and the BJP remains tightly organized and enjoys a strong support of the middle and upper class families and business community.

Unlike Congress, the BJP also has several well-run organizations focused on students, women and the party is allied with the Hindu religion based social organizations RSS and VHP.

BJP leadership has evolved from its early focus on village development in its previous political incarnation to inter-state competition and then to inviting foreign investment to drive economic growth. This sharp reversal in policy outlook was not welcomed by the grass-root party operators. BJP led government under the leadership of Atal Bihari Vajpayee between 1999 and 2004 focused on attracting much needed foreign investment and ratcheted up infrastructure development.

Big projects like new four-lane highways, power plants, airports and railroad expansion drove the economic growth during those five years. The country also saw rapid urbanization and several states controlled by the party also rolled back labor law controls.

During the last BJP led government, the business community was ecstatic and talks of India emerging as the world power was rampant in media while villages received little attention in infrastructure development.

Only one state Gujarat, where Narendra Modi led BJP government continued to govern uninterrupted since 2002, saw not only large development projects but also witnessed improvement in smaller villages. Electricity for the first time reached all villages and a vast network of man-made lakes provided relief from the persistent drought in the state.

Development in Gujarat is far from perfect, but the state stands out when compared to the progress in the rest of the nation. Policy makers around the nation first and then in the world began to take notice.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc