Words ought to be a little wild, for they are the assault of thoughts on the unthinking
- J.M. Keynes

Saturday, 1 February 2014

India - Voting for growth

In time to commiserate India's worst GDP print in some time, the latest column is now out looking at the Gandhi rate of growth.

Results of the state assembly elections on 8 December found that voters in four out of five states had dealt an unsurprising blow to the Congress party. The stock market duly rose the next day, reinforcing the narrative that ushering in the Bharatiya Janata Party (BJP) will automatically modify India’s growth trajectory to a higher rate. While it would take superhuman incompetence to match the abysmal record of the Congress-led United Progressive Alliance (UPA) government at the Centre, the belief that one party or leader can instantaneously change everything for the better is too facile. As this column has discussed previously, the structural problems facing the Indian economy can only be solved over time.
However, this is not to say that politics makes no difference to economic outcomes. Indeed, good leaders and good policies do make a difference. The difficulty is in figuring out ex-ante which candidate and party offers the two. “It’s obvious,” I hear you murmur. Let me point out the “dream team” of Manmohan Singh and P. Chidambaram that opened the UPA’s second innings. For the first time in Indian history, the stock market was halted limit-up a minute after it opened following the UPA’s election win in 2009. The markets went up more than 17% that day and you would have laughed at anyone who predicted anything similar to that shown in Graph 1.
Original column here.

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