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Market Update

Three Competing Visions in India’s Election


Author: Arjun Dave
ticker.com
Last Update: 8:33 PM ET April 20 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.

India’s 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 nation’s economy can’t 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.

Congress Believes India Lives in Villages

Congress Party has governed India for all but 13 years and had the traditional claim to power in New Delhi after successfully throwing out British rule through a non-violence movement in 1947.

The party sailed through in national elections till the late seventies but delivered little in economic growth, jobs and infrastructure development. Most elections were fought on religion and caste basis and minority votes were always taken granted by the Congress.

The nation fell behind other fast growing smaller countries in Asia and steadily shrank its small share of global trade and commerce to fast developing South East Asian nations.

Congress Party’s grip on power weakened as living standards stagnated and corruption took deeper root in the early eighties. Congress Party led the governing coalition and held on to power for the last ten years only after support from several smaller regional parties.

Congress Party, once enjoyed support of masses, middle class and elites; policy makers worked on Swadeshi or import substitution economic development model and focused on creating a balanced growth under five-year plan programs.

However, India failed to develop its own technology, implement new technology from abroad, and successfully build export markets. With unemployment staying above 12% for decades and abysmal infrastructure, India continued to lag in industrial development and already low living standards dropped further and the impoverished nation became even more dependent on foreign technology and imported goods.

Things began to change in the late eighties and with the rise of computing power and development of communication networks, India’s educated elite finally found a market that did not need government support. India finally began to see visible benefits of rising exports in growing wages, though limited to only top 0.5% of population.

This small but visible progress captured the imagination of many entrepreneurs.

Three decades ago, Manmohan Singh, then finance minister initiated economic reforms as the exports gathered steam and opened doors for foreign investments. Those policies delivered economic growth and benefited top 1% of the population but the growing economic activities eventually reached masses after seven years of reforms and rising investments in manufacturing.

Congress Party regained its control of power after a coalition led by Atal Bihari Vajpayee failed to explain voters why the faster economic growth under the BJP did not help masses.

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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