Results of the India elections could set back big retailers like Wal-Mart and Tesco, but foreign investors may be in for huge profits. Breakingviews’ Andy Mukherjee explains why with Reuters‘ Tara Joseph…
The Foreign Investor’s Candidate
Tara Joseph says: “Modi’s manifesto, Andy, he is the clear front-runner in the Indian elections, and it will be interesting to see what sort of economic climate he does bring if he wins when these marathon elections are over.”
Andy Mukherjee says: “Yes, Tara, you’re right. In fact, well, investors can either look at the BJP’s election manifesto as bad news, which they will if they are Tesco or Carrefour or Wal-Mart, or any other foreign retailer which was looking to enter the world’s second most-populous nation. Now, the BJP basically poured cold water on those dreams because it said in its manifesto that, if voted to power, it will not allow foreign investment in multi-brand retail. Now that would be actually a reversal of current government policy.”
Andy Mukherjee says: “But all other investors have something or the other to cheer in the BJP manifesto. So there is a lot of good here as well. Now for instance, the stress on inflation control, and on fiscal discipline, will cheer bond investors. And a better investment climate; speedier clearances, less red tape – now all of these things, of course, anybody can promise, they are very hard to deliver in a country like India. But if these are actually implemented, they will delight all varieties of investors both direct and financial.”
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From Concept to Completion
Tara Joseph says: “Speaking of delivery, let’s say we do have a Modi moment at the end of these elections, how long would it take to implement and see change?”
Andy Mukherjee says: “Well, the first signs of change will perhaps be visible in the budget in July. Although the new government wouldn’t have had enough time to really prepare for it. Now the next big push will probably come in the next fiscal year’s budget in February of 2015. Now that’s when Modinomics will really begin to rollout, provided of course that Narendra Modi does become prime minister. Now, we just – we don’t, and we wouldn’t really know that until May the 16th when the votes are actually counted and the results announced.”
Tara Joseph says: “Modinomics could be in May if the opposition in India wins the election. That’s seen as good for investors, unless you’re Carrefour or another major retailer.”
As the 800 million registered voters place their ballots over the next five weeks, investors, retailers, the world will be waiting in anticipation.