A population of workers with an average age of around 35 combined with the arrival of a new government may be pulling Incredible India to where, at last, its population and vigor may carry it aloft. Like China in the early 80’s and 90’s, India has the potential to achieve rapid growth. But due to lack of political will, religious divisions, corruption, poverty, a massive overhang of the post-colonial era when Marxist-socialist solutions were the fashion and lack of capital, India’s progress has been slow.
The analogy is of an aircraft taking off. The back wheels are still on the ground but the nose has lifted up. This has been the case for some time with the deadweight of the various factors holding her back. This is about to change.
India’s recent elections has brought a right centered government with a clear mandate for change. Indeed the new prime minister, Narendra Modi, former chief minister of Gujarat has achieved remarkable success in transforming his state into a vibrant economy. Modi is known domestically and internationally for eschewing the bureaucratic bottlenecks that have historically obstructed India’s development, and he and his allies campaigned heavily on a platform of economic reform and revitalization. Now the path toward change in India will not be so easy as the relatively weak leader of a large and diverse country (Stratfor).
Modi will have to balance local and regional interests on a national level, and India’s highly democratized political system will impede sweeping changes to New Delhi’s massive subsidy programs. While Modi will try to push an aggressive, business-friendly agenda, change may still not come easily or quickly for India unless early results can break through the long standing inertia. We note however there is impetus for the change however as results of India’s parliamentary elections come at a critical time for New Delhi (Stratfor).
Emerging Events predicts the potential for change will bring opportunities for investors. If Modi can steer his country onto a path of economic reform we will see an acceleration of the stick market to the upside and a strengthening currency.
Acknowledgement to Stratfor for supporting commentary.