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May 22, 2014

Indian Economy, Post -Election

The Indian economy is going to be steered by a new team. The important ministerial portfolios have been announced. Next week, the prime minister and his cabinet will be sworn in. Thereafter the government is expected to reveal its priorities and roll out its policies. The stock markets have reacted positively to Modi's leadership and promises of economic development in line with his Gujarat Model. What does the crystal ball indicate for the future?

Looking at the surge in optimism and investor confidence, in their recent article  K L Investment Partners  anticipate a long-term bull trend in the stock market and a positive feedback loop in the economy. Their summary:

     India Election Like Abe In Japan: 10-Year Bull Market Has Started

  • India has a stable, single-party government after 25 years; weak governance due to multi-party coalition politics has been the primary cause for India’s growth being significantly below potential.
  • Modi, leader of the new government, has a reputation as being pro-business, with the willingness and ability to quickly push through major changes through the complicated, slow and corrupt bureaucracy.
  • Indian economy has significant tailwinds: demographic dividend, large highly educated and skilled workforce, large and growing middle class.
  • Risk: terrorist strike leads to the right-wing government initiating a military confrontation with its nuclear armed neighbor (Pakistan).
  • Risk: ruling party has been accused of having an anti-minority and fascist ideology. With 13% Muslims and 2.4% Christians, this may lead to negative socio-economic consequences.
You can find the full article  here,  as well as breaking news and information on global stocks by expert analysts here.

Keep in mind that making long term predictions is a long shot in the dark ... there is simply too much uncertainty and unpredictability around!

Postscript


A government which robs Peter to pay Paul can always depend on the support of Paul.

- George Bernard Shaw

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