India’s population has begun heading to the polls in an election that is expected to bring sweeping reforms to the world’s second most populous country.
The ruling Congress Party, led by prime minister Manmohan Singh, is trailing in opinion polls to the “pro-business, pro-reform” Bharatiya Janata Party (BJP) and its leader Narendra Modi. Voting began last week, with 13 million people in the country’s capital, Delhi, voting on April 10 – although the results will not be announced until May 16.
The vote has been billed as the world’s biggest ever democratic election, with 814.5m registered voters. As of today (April 14), 110 constituencies have voted, with a further 433 to come in the next four weeks.
Kunal Desai, manager of the Neptune India fund, said: “A lot of people are backing Narendra Modi. It is not just businesses, but people in rural India who recognise [the government’s] mismanagement.
“The Congress Party did well through bringing in subsidies and entitlements, but people now see it is unsustainable. We need to see job growth – investors are positive on India because of demographics, but if there are no jobs then it is a disaster.”
India’s economic growth has fallen significantly in the past four years, from a peak of 11.4 per cent in the first quarter of 2010 to just 4.7 per cent in the fourth quarter of 2013.
In addition, inflation has been stuck at more than 9 per cent for much of the past three years, only falling to 8.1 per cent in February this year.
New central bank governor Raghuram Rajan was forced to raise interest rates earlier this year in a bid to control the slide of the rupee against the dollar, after the US Federal Reserve began to taper its quantitative easing stimulus programme.
But Indian stockmarkets have on the whole reacted positively to the policies Mr Rajan has put in place since taking on his role in September. He has allowed the rupee to gradually depreciate and addressed India’s crippling current account deficit. India’s leading stock index, the NSE CNX Nifty Fifty index, is down 16.6 per cent in the three years to April 9 in sterling terms, but has gained 9.7 per cent so far this year.
