This week concludes the selection of a new prime minister in India, and Narendra Modi from the Bharatiya Janata party appears destined to be the new leader of the world’s largest democracy. There are few words to describe how high expectations are for the Hindu nationalist to succeed.
Equity markets in India have risen 17% over the past three months, hitting all-time highs earlier this week. Roughly half of freely traded stocks are owned by investors outside of India. This rise underscores the hope the world has for change in India with a new party in charge.
The problems the country faces – and the solutions that are needed – are challenging and complex. For example, citizens are more likely to have cell phones than proper plumbing. Massive amounts of food are harvested and then wind up rotting on rail cars waiting to be offloaded. Forty percent of India’s children are malnourished – not from lack of food but from poor hygiene.
However, Mr. Modi, the prime ministerial front-runner, has offered a great deal of hope for addressing some of these structural issues and is known as a champion of economic development. This emphasis has helped him overcome his reputation as a Hindu hard-liner, which had caused concern in a country that has struggled with sectarian violence.
He has alleviated those fears with simple yet effective messaging, such as "toilets first, temples later," indicating his hopes for lifting the people of India out of poverty and solving those structural and logistical roadblocks.
If he succeeds, the global impact would be enormous. The economic structure of Asia has benefitted from skilled, inexpensive labor, of which India has a surplus. Effectively harnessing the country’s productivity would shift a great deal of focus back to India and force changes well beyond its borders.
My View: Hopes for this new government are ridiculously high; to the point where some measure of short-term disappointment is inevitable. For the long term however, I hope Mr. Modi stays focused on toilets, as they represent the most basic and necessary building blocks of a stronger Indian economy.
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