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India Paves the Way for Fast-Track Growth

The results of the recent Lok Sabha national elections in India are likely to have long lasting implications for the development of the country.

With the Congress Party winning all but an 11-seat majority, India finally has, for the first time in 20 years, a democratically elected government that has essentially a mandate to govern. With 261 seats, the Congress Party requires just another 11 seats to form a majority, and with plenty of allied parties wanting to lend a hand for the opportunity to govern, it can grab the chance to push through much-needed reform on its own terms.

This is in stark contrast to the previous two decades, where national political divisions resulted in a succession of often deeply divided coalition governments, and the consequent major adjustments, compromises or abandonment of many necessary reforms. The re-election of Manmohan Singh as prime minister as well is a sure sign that Indians require a strong government with a strong leadership to guide them. Dr. Singh’s reappointment marks the first time since 1961 that a sitting PM has been reinstated.

The importance of this victory by the Congress Party cannot be underestimated. With India in a literal state of emergency in 1991, the country has gradually clawed its way back from the brink of bankruptcy and economic chaos and into the 21st century. And who was the architects of all this? The Gandhi family – now with Sonia Gandhi as head of the Congress Party – who realized the need to bring into power respected economists and lawyers to drive the country away from its failed Soviet-era structures and into a more modern state. And who was charged with overseeing the economic redevelopment of the country at the time? Dr. Sing – then a respected international economist rather than a traditional politician, now a man on his second term as prime minister.

The Congress Party win is likely to accelerate India further along the pace of reform and redevelopment, and the election has also done much to clean out the old guard of “gangster” politicians, many of whom held seats while being held on convictions from murder to large scale fraud. In their place comes in a new breed of Indian politician, educated, increasingly in-tune with globalization, and willing to sacrifice to a life of struggle while helping shift the country along a new course.

Pro-business, pro-reform, many of the battles the Congress Party faces in its drive to upgrade and modernize India and its infrastructure will be hard fought. Old, minority interests, such as dealing with land reform in Mumbai, will be hard to win. However, India has voted, and how. A government mandate, and a unified party directed by economists and lawyers bent on legal reform are likely to have a huge impact in getting through legislation to open up to competition within India’s domestic markets, encourage foreign direct investment, deal with the legal and investment issues concerning infrastructure development, and place the nation on a fast track to reform much as China was able to achieve in the 1990s.

The implications are going to be huge.
 
This article was written by Chris Devonshire-Ellis for the blog 2point6billion.com.