Singh Seeks Boost With Regional Poll Win Over Chief India Rival
Comment of the Day

May 02 2013

Commentary by David Fuller

Singh Seeks Boost With Regional Poll Win Over Chief India Rival

Here is a brief section of this interesting assessment from Bloomberg
India's ruling Congress party aims to oust its chief rival in weekend elections in southern Karnataka state, a victory that may bolster the government as it bids to revive the economy ahead of a national poll.

Congress and the Hindu-nationalist Bharatiya Janata Party have deployed star campaignersRahul Gandhi and Narendra Modi to the province seeking votes. An opinion poll for the CNN-IBN television channel forecast Congress may win as many as 129 seats in the 224-member assembly to the BJP's 49. Voting is on May 5, with results due May 8.

Prime Minister Manmohan Singh and his Congress party are trying to build momentum ahead of national elections scheduled for May 2014 in the face of persistent corruption charges that have hobbled the government's legislative agenda. For the BJP, losing power in Karnataka, which is home to offices of Intel Corp. (INTC) and General Electric Co., would frustrate the party's bid to expand its support base beyond its stronghold in the north.

"For Congress, winning Karnataka is crucial as the party has had very little good news in recent times," said Sandeep Shastri, pro-vice chancellor of Jain University in Bangalore, Karnataka's capital. "Victory will be a huge morale booster."

The provincial government in 2011 became embroiled in a $3.6 billion illegal mining scam in which companies were accused by the state's anti-corruption ombudsman of operating without permits and evading taxes. Chief Minister B.S. Yeddyurappa was named in the probe and was forced to step down. He left the BJP to form his own party.

David Fuller's view India's stock market (weekly & daily) has had a good three weeks, benefiting from lower energy prices and expectations of a regional election victory which would help Mr Singh to stay in power until the national election a year from now.

The comparatively sharp rally has increased interest in India, which is a positive development for the medium to longer term, if these gains can be maintained. However, historic resistance above 20,000 represents a formidable near-term challenge.

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