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Singhs win will give a new dimension to Indian economy.
By Cherian Thomas and James Rupert
May 18 (Bloomberg) -- Prime Minister Manmohan Singhs electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the countrys economic growth.
Singhs ruling Congress party will start forming a new government today without needing the support of communist lawmakers who frustrated plans to entice foreign investment and sell state-owned companies in his first five-year term. The ruling Congress party won its most seats since 1991 in the election, which concluded May 16.
This is an absolute game changer, said William Nobrega, the co-author of Riding The Indian Tiger, who advises U.S. companies on investing in the worlds largest democracy. It will move India at a mighty pace to where it deserves to be in the global economy.
Political stability will make India a more attractive investment destination as Singh, 76, seeks the funds to stimulate Asias third-largest economy. It may also encourage President Barack Obama and his administration to seek greater cooperation in the fight against rising militancy in neighboring Pakistan and Afghanistan.
This is good for India and good for the world, said Rahul Bajaj, chairman of Pune-based Bajaj Auto Ltd., Indias second-largest motorcycle manufacturer.
War on Terror:
The U.S. wants Indian help in its fight against Islamic militancy in the region, especially Pakistan. Singh stalled a peace process with Indias nuclear-armed neighbor following terrorist attacks in Mumbai that killed 166 people in November.
The U.S. recognizes the significance of the election for the people of India, the White House said in a statement May 16. President Obama looks forward to continuing to work with the Indian government to enhance the warm partnership between our two countries.
Stronger Foothold
Wal-Mart Stores Inc. and Prudential Plc are among global companies that stand to gain a stronger foothold in India now the government can function with fewer coalition partners.
There were so many major initiatives that were sidelined, Nobrega said. It will have a phenomenal boost on the Indian economy this year and next.
The Congress victory margin may also invigorate what is already the nations longest stock rally in three years. The Bombay Stock Exchange Sensitive Index, or Sensex, has risen 26 percent this year, lagging behind Chinas 45 percent gain.
The play button will be on now, said Madhabi Puri Buch, Mumbai-based chief executive officer of ICICI Securities Ltd., a unit of Indias second-biggest bank. If global cues continue to be positive, the play could even become a fast forward.
The incoming government will need to bolster an economy thats growing at the slowest pace in seven years as the global recession saps demands for Indian goods. Industrial output fell by the most in 16 years in March as exports plunged by a record.
India as a 'veto power'
India, whose international political ambitions include a permanent seat on the United Nations Security Council, wants to maintain annual growth rates in excess of 8 percent for two decades to reduce poverty.
Gross domestic product has risen more than four times since 1991, when Singh, then finance minister, abandoned Soviet-style state planning and introduced free-market measures. He cut red tape, removed state-enforced production caps on steel and cement makers, and allowed overseas companies such as Ford Motor Co. to set up Indian operations.
Choked Roads
India received about $38 billion of foreign direct investments last year, about a fifth of the flows that went to neighboring China, which opened its economy 13 years earlier.
Singhs first term as prime minister required the backing of communist parties to form a parliamentary majority.
Communist resistance stalled a bill to raise the foreign investment ceiling for insurers to 49 percent from 26 percent. Singh also failed to pass a bill aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. His plan to permit global retailers into India also foundered. But one can rest assured that all those tweaks will take place this time, and India will emerge stronger than ever.
"All in all, one can expect India to sky-rocket ahead under the leadership of the great economist Dr. Manmohan Singh and his 'dream team'. One will see India recover much faster from the global recession than most countries. If global cues favour India, chances are India might aswell touch the 9.5% growth mark once the world recovers from recession.."
By Cherian Thomas and James Rupert
May 18 (Bloomberg) -- Prime Minister Manmohan Singhs electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the countrys economic growth.
Singhs ruling Congress party will start forming a new government today without needing the support of communist lawmakers who frustrated plans to entice foreign investment and sell state-owned companies in his first five-year term. The ruling Congress party won its most seats since 1991 in the election, which concluded May 16.
This is an absolute game changer, said William Nobrega, the co-author of Riding The Indian Tiger, who advises U.S. companies on investing in the worlds largest democracy. It will move India at a mighty pace to where it deserves to be in the global economy.
Political stability will make India a more attractive investment destination as Singh, 76, seeks the funds to stimulate Asias third-largest economy. It may also encourage President Barack Obama and his administration to seek greater cooperation in the fight against rising militancy in neighboring Pakistan and Afghanistan.
This is good for India and good for the world, said Rahul Bajaj, chairman of Pune-based Bajaj Auto Ltd., Indias second-largest motorcycle manufacturer.
War on Terror:
The U.S. wants Indian help in its fight against Islamic militancy in the region, especially Pakistan. Singh stalled a peace process with Indias nuclear-armed neighbor following terrorist attacks in Mumbai that killed 166 people in November.
The U.S. recognizes the significance of the election for the people of India, the White House said in a statement May 16. President Obama looks forward to continuing to work with the Indian government to enhance the warm partnership between our two countries.
Stronger Foothold
Wal-Mart Stores Inc. and Prudential Plc are among global companies that stand to gain a stronger foothold in India now the government can function with fewer coalition partners.
There were so many major initiatives that were sidelined, Nobrega said. It will have a phenomenal boost on the Indian economy this year and next.
The Congress victory margin may also invigorate what is already the nations longest stock rally in three years. The Bombay Stock Exchange Sensitive Index, or Sensex, has risen 26 percent this year, lagging behind Chinas 45 percent gain.
The play button will be on now, said Madhabi Puri Buch, Mumbai-based chief executive officer of ICICI Securities Ltd., a unit of Indias second-biggest bank. If global cues continue to be positive, the play could even become a fast forward.
The incoming government will need to bolster an economy thats growing at the slowest pace in seven years as the global recession saps demands for Indian goods. Industrial output fell by the most in 16 years in March as exports plunged by a record.
India as a 'veto power'
India, whose international political ambitions include a permanent seat on the United Nations Security Council, wants to maintain annual growth rates in excess of 8 percent for two decades to reduce poverty.
Gross domestic product has risen more than four times since 1991, when Singh, then finance minister, abandoned Soviet-style state planning and introduced free-market measures. He cut red tape, removed state-enforced production caps on steel and cement makers, and allowed overseas companies such as Ford Motor Co. to set up Indian operations.
Choked Roads
India received about $38 billion of foreign direct investments last year, about a fifth of the flows that went to neighboring China, which opened its economy 13 years earlier.
Singhs first term as prime minister required the backing of communist parties to form a parliamentary majority.
Communist resistance stalled a bill to raise the foreign investment ceiling for insurers to 49 percent from 26 percent. Singh also failed to pass a bill aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. His plan to permit global retailers into India also foundered. But one can rest assured that all those tweaks will take place this time, and India will emerge stronger than ever.
"All in all, one can expect India to sky-rocket ahead under the leadership of the great economist Dr. Manmohan Singh and his 'dream team'. One will see India recover much faster from the global recession than most countries. If global cues favour India, chances are India might aswell touch the 9.5% growth mark once the world recovers from recession.."
