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International Events | 27
India Election 2009:
Business as usual
What will be the impact of the Indian election on
the country’s burgeoning economy?
by Shyam Kumar,
Director & CEO, Kotak
Mahindra (UK) Ltd
I
ndia has been jockeying for posi-
tion as one of the markets
best placed for sustain-
able recovery from the
financial market car-
nage. The Indian election
this month – this piece is being writ-
ten before the results are known - will have an Minimum
important role in helping towards a sustain- Programmes’ (CMPs)
able recovery in India and the outlook for that relate to both their eco-
investment in one of the world’s most impor- nomic and political agendas.
tant emerging markets. In this article I will out- Although the situation is fluid and there
line my views on the likely impact of the are many possible outcomes, we at Kotak
election results and the outlook for foreign believe that no matter which party comes to
investors in the subcontinent. power, continued reform alongside political
With 714 million voters, India is the world’s and fiscal stability will be the key to financial
largest democracy. Whilst socio-cultural and recovery and protection of growth in the
security issues have featured prominently in medium to long term. We can be optimistic
campaigning, voters have in the past proven to that a balanced coalition government will have
be highly sensitive to economic issues. Polling The a good chance of progressing with reforms
has been taking place in five separate phases main relating to foreign investment - just as a ‘lum-
across the sub-continent during the course of parties are the bering elephant’ may move slowly but once it
the past month. The final result has been very incumbent United sets off, it rarely reverses its course.
difficult to predict but a clear majority for any Progressive Alliance, the National Democratic Financial markets have largely factored in
one party had been thought unlikely due to Alliance, and the so-called Third Front com- political uncertainty post elections, and have
the many issues and interests across such a vast prising an alliance between the communist not been upset by the major party manifestos
country. The impact of external events such as and regional parties. Post election, parties will as these are largely seen as necessary political
the global financial crisis on domestic sensibil- form coalitions which will go further than any positioning. However, large risk would exist if
ities have also been difficult to call. pre-poll alliances and be based on ‘Common there were to be a hung Parliament with no
www.investmentinternational.com May 2009 Investment International
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