Minutes after tycoon Ratan Tataabandoned a two-year quest to build the world’s cheapest car in West Bengal over farmer protests, he got a text message from the frontrunner to be India’s next leader: “Welcome to Gujarat.”
Within 72 hours, Narendra Modi arranged land, power, tax exemptions, a four-lane highway and a 95.7 billion-rupee ($1.2 billion) loan for the Nano to be built in the state, according to a former chief minister and a retired bureaucrat in Gujarat who asked not to be named because the details aren’t public. Six years later, the plant employs some 10,000 people, helping per capita income in Gujarat triple since Modi took office in 2001.
Modi’s ability to expedite investments like Tata’s has made his Bharatiya Janata Party the favorite to win elections ending May 16 and underpinned a rally that has pushed Indian stocks to new highs. If polls are right and he becomes prime minister, his plans to spur investment across India will depend largely on state power brokers who control land, water and electricity.
“He’s run the state like a CEO, not a chief minister -- that’s the impression that you get in Gujarat,” Christopher Wood, chief equity strategist at CLSA Asia-Pacific Markets in Hong Kong, said by phone. “But if he doesn’t get a big mandate to control the country the way he controlled the state, he’ll have obstacles to attract investment the way he did with the Tata Motors factory.”
I think India’s economy needs the CEO-style leadership which Modi can provide, and if the economy grows rapidly far more people will participate. An overwhelmingly high percentage of corporate CEOs in India want Modi, but the extent of his influence will be determined by over 800 million voters from all walks of life.
A latter stage of this article says that a CNN-IBN opinion poll published on April 4th predicts a best-case result for Modi’s BJP party of at least 54 seats short of the 272 needed to rule without the coalition which would inevitably weaken Modi’s power. However, India’s polls are notoriously unreliable, which is hardly surprising considering the size and diversity of the electorate.
Therefore, I have no idea how large Modi’s majority victory will be, although having read about him, it was not difficult to predict he would win the election, given India’s myriad problems and the obvious need for change.
We will know the result of the world’s biggest political election in about a month’s time. Here are my guesses regarding the Sensex Index (weekly 10-Yr, weekly 5-Yr & daily) once the vote has been counted. If Modi is not elected, which would be a shock, the stock market would quickly retrace more than its 15% advance since September 13th, when he became the BJP’s candidate for prime minister. I also think there would be a lesser, probably temporary pullback if Modi has a smaller victory than generally expected. Conversely, the closer Modi gets to 272 seats, the more likely we are to see a further Sensex Index run to the upside.Back to top