India is a rapidly growing economy.
Its per capita (per person) GDP is rising rapidly and the consumption boom is so very evident. Many say this is just the beginning.
Its per capita (per person) GDP is rising rapidly and the consumption boom is so very evident. Many say this is just the beginning.
INDIA'S PER CAPITA GDP (2010-2018)
India is the largest democracy in the world and its elections are a phenomenon worth studying. 2014 elections involved an electorate of 863.5 million people who used 1 million domestically produced - electronic voting machines to cast their votes.
Unlike developed democracies participation rate in Indian elections remains high at about 60%. India is a - 70 year old multi party democracy which follows a parliamentary system of government - which means that members of parliament elect a leader who is the "Prime Minister" of the country. India has about 885 television channels (highest in the world) in 22 different languages - many of these are news channels which disseminate News, debates and discussions making the elections a noisy and a "hotly contested" affair.
2009-2014 Government in India was a coalition government and by the end of its term in 2014 it was marred with serious corruption charges, a -ve environment and falling growth rates in the economy. In fact in the year 2014 - Morgan Stanley coined the word "Fragile Five" and India was considered as one of the fragile five economies.
It was in this backdrop and with expectations of high growth rate and corruption free government - the current party "BJP" came to power by winning the 2014 elections with a handsome majority.
2014-2019 Government in India has been a one party majority government led by BJP. While the corruption at higher levels definitely seems to be under control, growth of Indian economy has not been up to expectations. One of the measures of the level of corruption being low is the number of deals in real estate - which seem to be low ( most real estate deals would involve large amounts of cash).
The BJP government also took two big reforms GST and Demonetization of the currency. Both these reforms have had an impact on the economy. While GST has benefited many sectors of the economy and will continue to benefit, it is widely believed that Demonetization has led to decrease in growth of the economy. However it has definitely led to "financialisation" of the economy as many people have opened bank accounts. The Aadhar scheme ( which is some kind of a social security number) coupled with bank accounts is setting up a strong base for cash transfers by subsidy in future. ( The govt has announced a program in the current budget). This may be a game changer over the years as indirect subsidies ( e.g. that of fertilizer, kerosene etc are marred with widespread corruption and the benefits seldom reach the poor).
The current government is also going to highlight its focus on electrification of the villages, making of toilets and immunization.
Whether the Indian electorate is going to buy into all of this or will it punish the current government for undertaking the reforms of GST and Demonetization and under delivering on its promise of growth of economy remains to be seen.
In any case markets over the years do not necessarily react much on change of governments. Their journey is dependent on many many other factors and "elections" is just one of them.
INDIAN STOCK MARKET PERFORMANCE OVER THE LAST 4 GOVERNMENTS
Please do remember the fact that Indian stock markets are about 40% owned by foreigners and the increase in domestic savings towards the equity markets ( 2016-2018 period) which could be a result of demonetization has helped markets a lot.
This flow of domestic liquidity has helped stabilize the markets when foreigners were tempted to withdraw money from emerging markets in 2018. (maybe one of the big difference between India and Turkey..).
Perhaps what matters more is inflow of monies (both domestic and foreign) to the markets. What will make that happen is the million dollar question???
