Focus on India

8 April 2014

Beginning in the last few months of 2013, the macroeconomic scenario has shown clear signs of improvement thanks to measures taken by the Minister of Finance, Chidambaram and the new governor of the central bank, Rajan. The rate of inflation has fallen from 11% to 8%, the current account deficit is down from $88 billion to $35 billion and the currency has stabilized. The market has reacted positively to these developments, but everyone is waiting with bated breath for the general elections which will be held in April and May. According to all polls, Narendra Modi’s BJP, currently the opposition party, will defeat Rahul Gandhi’s Indian National Congress.

If this is indeed the case, we can expect that the outcome will be met with market euphoria. Modi has done excellent work as Governor of Gujarat, transforming one of India’s poorest states into one of its most advanced.  If he is elected, it could revive the economy of a country stuck in a slump for several months now. This holds especially true for infrastructural investments, due to the lack of leadership and the corruption scandals involving bureaucrats and politicians.

by Moreno Tatangelo