Singh’s ‘Game Changer’ Win to Unlock India Economy; Shares Soar
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By Cherian Thomas and James Rupert
May 18 (Bloomberg) -- Prime Minister Manmohan Singh’s electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the country’s economic growth as it struggles to free half a billion people from poverty.
India’s benchmark stock index soared more than 17 percent, breaching the daily limit and triggering a second trading halt. The rupee surged as much as 3.3 percent, the most in more than two decades, to 47.78 a dollar, according to data compiled by Bloomberg.
“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 world’s largest democracy. “It can truly move India in a much faster 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 Asia’s 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.
Singh’s ruling Congress party will be able to form a government without needing the support of communist lawmakers who frustrated plans to entice foreign investment in his first five-year term. The ruling Congress party won its most seats since 1991 in the election, which concluded May 16.
Caretaker Premier
Singh handed his resignation to President Pratibha Patil today after a cabinet meeting, and will continue as caretaker premier until a new government is formed.
“This is good for India and good for the world,” said Rahul Bajaj, chairman of Pune-based Bajaj Auto Ltd., India’s second-largest motorcycle manufacturer.
Congress and its allies won 261 of the 543 elected lower- house seats, with the party getting 206 lawmakers of its own, 61 more than in 2004 and almost twice as many as the opposition Bharatiya Janata Party. Lal Krishna Advani will continue to lead the BJP in parliament, its chief, Rajnath Singh, said in a statement.
The main Communist party, Singh’s partner in the last administration, won only 16 seats, less than the 43 it gained in the last election. The communists, who resisted increased foreign ownership of insurers and any outside investment in retailing, tried to bring down the government last July over a civil nuclear energy accord with the U.S.
‘Warm Partnership’
The U.S. wants Indian help in its fight against Islamic militancy in the region, especially Pakistan. Singh stalled a peace process with India’s 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.”
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 incoming government will need to bolster an economy that’s 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.
Trading Halt
In the first day of trading after the election results, the benchmark Sensitive index gained 17 percent to 14,284.21, while the Nifty index jumped 17 percent to 4,323.15, triggering a day’s halt in trading for the first time ever.
Share | Email | Print | A A A
By Cherian Thomas and James Rupert
May 18 (Bloomberg) -- Prime Minister Manmohan Singh’s electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the country’s economic growth as it struggles to free half a billion people from poverty.
India’s benchmark stock index soared more than 17 percent, breaching the daily limit and triggering a second trading halt. The rupee surged as much as 3.3 percent, the most in more than two decades, to 47.78 a dollar, according to data compiled by Bloomberg.
“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 world’s largest democracy. “It can truly move India in a much faster 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 Asia’s 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.
Singh’s ruling Congress party will be able to form a government without needing the support of communist lawmakers who frustrated plans to entice foreign investment in his first five-year term. The ruling Congress party won its most seats since 1991 in the election, which concluded May 16.
Caretaker Premier
Singh handed his resignation to President Pratibha Patil today after a cabinet meeting, and will continue as caretaker premier until a new government is formed.
“This is good for India and good for the world,” said Rahul Bajaj, chairman of Pune-based Bajaj Auto Ltd., India’s second-largest motorcycle manufacturer.
Congress and its allies won 261 of the 543 elected lower- house seats, with the party getting 206 lawmakers of its own, 61 more than in 2004 and almost twice as many as the opposition Bharatiya Janata Party. Lal Krishna Advani will continue to lead the BJP in parliament, its chief, Rajnath Singh, said in a statement.
The main Communist party, Singh’s partner in the last administration, won only 16 seats, less than the 43 it gained in the last election. The communists, who resisted increased foreign ownership of insurers and any outside investment in retailing, tried to bring down the government last July over a civil nuclear energy accord with the U.S.
‘Warm Partnership’
The U.S. wants Indian help in its fight against Islamic militancy in the region, especially Pakistan. Singh stalled a peace process with India’s 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.”
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 incoming government will need to bolster an economy that’s 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.
Trading Halt
In the first day of trading after the election results, the benchmark Sensitive index gained 17 percent to 14,284.21, while the Nifty index jumped 17 percent to 4,323.15, triggering a day’s halt in trading for the first time ever.
