On 17th May, 2004, the Indian stock markets hit its lower circuit, (-20%). The Bombay Stock Exchange (BSE)-30 Index, Sensex, fell by 842 points, its steepest one-day fall ever then.
The National Democratic Alliance (NDA) led by Bharatiya Janata Party (BJP) lost the general election to the United Progressive Alliance (UPA) led by India’s GOP, the Indian National Congress (INC). That the UPA alliance was supported by the Left/communist parties seemed to have spooked the markets in believing that the reform momentum will end and India’s growth trajectory which was recovering would be stalled.
Do Global Corporations and Investors consider India becoming un-democratic, autocratic? Should they worry about Modi being a ‘Strong Man’? Global Corporations and Investors have seen the financial impact of investing in undemocratic, strongman led countries. We do not think this worry has got anything to do with the form of political system. The worry stems from individuals who have unlimited power to decide and destroy. We however argue that, India is not China, Russia or Turkey. Modi is not a Xi, Putin or Erdogan.
On June 25, 1975 Prime Minister Indira Gandhi – without consulting her Cabinet colleagues in the then Congress government – sent a letter to the President of India recommending the suspension of individual rights and freedom. India remains a working experiment in democracy. The Emergency temporarily shut down the experiment. For those who were unaware about this dark phase of India’s history, it is a reminder of the continuous struggle to find the correct form of government that connects the people to its leaders and, yet, is given the time to deliver on its promise.
In light of the reality of India, the statement that a BJP-led government could be a Reagan-like Administration is a stretch. If the BJP did take those imaginary steps of reducing subsidies and leaving 50 years of bad planning to free markets to resolve, it would be hounded from power within a year.
The chances are that a future Modi Administration may end up more like an Obama regime: one of high expectations and low delivery where many supporters would like to press the CTRL ALT DEL button, as would President Obama.
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