Sweeping wins for India’s pro-business opposition party in state elections are being welcomed by investors as a sign that national polls next year will deliver a government capable of tackling the malaise in Asia’s third-largest economy.
Business leaders are openly cheering on the Bharatiya Janata Party (BJP). Several surveys show overwhelming business support for BJP’s prime ministerial candidate, Gujarat Chief Minister Narendra Modi, reflecting widespread frustration with the ruling Congress party-led government’s failure to end extravagant corruption and scythe through a thicket of bureaucratic red tape that has stifled investment.
India’s economy has slowed from an average of 8 percent growth over a decade to less than 5 percent in the last year, too slow to alleviate the poverty affecting hundreds of millions of people, or provide enough jobs for its swelling population.
Investors hope the BJP can do better, given an earlier incarnation as a government that opened markets.
They are especially banking on Modi’s reputation for promoting Gujarat, which he has led for 12 years, as an industrial haven.
India’s SENSEX stock index surged 1.6 percent on Sunday to a record high after official results confirmed that the BJP trounced Congress in four heartland states, including Delhi.
The rupee also strengthened to 60.84 against the US dollar at one point, its strongest position since August.
General elections are due by May. A BJP victory might also be welcomed abroad. South Korea’s POSCO has been trying to advance plans for a US$12 billion steel plant in Orissa State since 2007 and giant US retailer Wal-Mart Stores Inc recently dropped plans to open stores in India because of onerous local product-sourcing requirements.
Enthusiasm for the BJP has not been dimmed by recent moves at odds with its pro-business reputation.
The party led street demonstrations last year against opening up India’s huge yet underdeveloped retailing industry to foreign investment. A BJP lawmaker recently asked the Indian Supreme Court to block an Etihad Airways deal to buy a 24 percent stake in Indian carrier Jet Airways.
Even Modi’s government in Gujarat this year irked solar power companies by trying to cut their promised fees.
Before the party lost power in 2004, it had long been seen as India’s main business-friendly party compared with the left-leaning Congress. The BJP once championed the reforms it railed against recently and investors believe it will flip back to supporting them if it returns to office.
The Congress-led government last year eased restrictions on foreign investment in retail and aviation, hoping to revive growth. However, it also dismayed businesses by passing land rights and environmental protection laws that make it harder to obtain land for factories and mines.
The business community’s Modi fever may be wishful thinking, HDFC Bank chief economist Abheek Barua said.
India’s problems are too deeply ingrained to be solved by one man or one party, he said. Even if the BJP were to win a majority in parliament, it would likely be too small to avoid the gridlock that plagues Indian politics.
Replicating the red carpet experience for land acquisition and permits in India’s far-flung states would be even more difficult, Barua said.
“The business community has sort of rallied behind Modi,” he said. “Partly because of the attraction of Gujarat and partly because of disgust with the current government’s record.”
PROTECTIONISM: China hopes to help domestic chipmakers gain more market share while preparing local tech companies for the possibility of more US sanctions Beijing is stepping up pressure on Chinese companies to buy locally produced artificial intelligence (AI) chips instead of Nvidia Corp products, part of the nation’s effort to expand its semiconductor industry and counter US sanctions. Chinese regulators have been discouraging companies from purchasing Nvidia’s H20 chips, which are used to develop and run AI models, sources familiar with the matter said. The policy has taken the form of guidance rather than an outright ban, as Beijing wants to avoid handicapping its own AI start-ups and escalating tensions with the US, said the sources, who asked not to be identified because the
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
Her white-gloved, waistcoated uniform impeccable, 22-year-old Hazuki Okuno boards a bullet train replica to rehearse the strict protocols behind the smooth operation of a Japanese institution turning 60 Tuesday. High-speed Shinkansen trains began running between Tokyo and Osaka on Oct. 1, 1964, heralding a new era for rail travel as Japan grew into an economic superpower after World War II. The service remains integral to the nation’s economy and way of life — so keeping it dazzlingly clean, punctual and accident-free is a serious job. At a 10-story, state-of-the-art staff training center, Okuno shouted from the window and signaled to imaginary colleagues, keeping
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
RSS