The 15th Lok Sabha election results came out last Saturday(16th May) and boy what a result it was. The Indian democracy is celebrated all across the globe for its vibrancy and dynamism and this time the results proved it beyond doubt. This election result has been unprecedented and unexpected for a variety of reasons. The elections have thrown lot of stories within the large story of return of the electorate to the national parties. The government will now be more stable and hopefully more effective and decisive one. How will this impact your and my life? Should we be really rejoicing like the whole world is doing or should we be cautious? Well , I think its a momentous occasion in the Indian democracy and is a good news for all the citizens . The reason I say this is because:-
1. Stable government means more money in the economy - A stable government headed by the original reformist Mr . Manmohan Singh will send a strong signal to the whole world about India's pro-reform stance and its ability to push thorough tough decisions which were not possible till now, because of various opposing parties in the parliament like Left etc. This will bring large money in the Indian economy in form FDI, FII etc. India is a capital starved nation, as on today, and the expected money flow can do wonders to its much needed infrastructure programs . More money will mean more investment leading to better growth rate.Andits no secret that better grwoth means higher income and better lifestyle for you ,me and Joe.
2. Reforms will get a push - With anti-reform parties biting dust in the election, it is expected that government will push through reforms is key areas like Insurance (increasing FDI limit to 49% from current 25%), pension, banking etc . Reforms in areas of health care, education, police ,judiciary,administrative reforms etc are also much needed to ensure that the country reaps full benefit of its demographic advantage, it has over other countries. Divestment of PSUs and 3G spectrum sale will also see the light of the day. All this will bring in more money to the government exchequer which will improve its fiscal deficit situation.
3. Better sovereign risk rating - With more investment in the economy, improved fiscal status,more revenues due to divestment etc and higher growth rate will ultimately result in better sovereign rating for the country. This will make India an even better investment destination.
4. Continued focus on equitable growth - With implementation of NREGS , the government has made a laudable attempt to include the poorest or poor in the growth story of India. This also is an attempt to provide some sort of social security to the poor people in the country. This is likely to continue. Schemes like these ensure that the rural economy keeps ticking which in turn benefits companies in FMCG, pharma, durables industry. This too helps the growth of the country. In fact one of the reasons why India is relatively better off than its peers in the western world today is because of its vibrant and growing rural economy.
As I write this, the stock markets in India have given a thumbs up to the new verdict and how. The trading has been temporarily suspended because the markets zoomed 20% in less than a minute of trade. This speaks volume about the confidence the investors have reposed in Mr. Manmohan Singh and his party. But, the government needs to siege this opportunity and use this mandate to make a difference to the long term story of India like Mr Singh did in 1991 with his first reforms. The time is right and Mr Singh has all the arsenals he needs to fight the gloom and doom of recession. He needs to use his vision and conviction one more time. I am sure Mr. Singh will remember what US President George Bush said before leaving whitehouse."Histroy will judge me" .