Friday, May 16, 2014

Modi election - awaking an economic giant


The Modi election to prime minister will awaken an emerging market giant. As one of the BRICS, India has been an important part of any emerging market story, but it has failed to deliver the same growth as China. It is currently plagued with low growth and high inflation. The landslide victory which may give the BJP party an outright majority may allow for economic reforms that increase growth. Many are calling this a pro-business victory, but it may be better to call it a pro-efficiency victory. This new government could lead to an end of corruption, government inefficiency, red-tape, and rent-seeking behavior that has damaged the potential for this large democracy.  A high growth India is good for the poor and good for world trade.

Elections shift investor sentiment. Let's hope there is follow-through.

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