http://www.zerohedge.com/news/2014-05-16/narendra-modi-good-bad-ugly

Narendra Modi: The Good, The Bad, & The Ugly

Submitted by Tyler Durden on 05/16/2014 21:54 -0400

Given the surge in India's stock market, echoing the reflexive pro-business exuberance of last year's Japanese stock market, the similarities between India's newly-elected PM Narendra Modi and Japan's Shinzo Abe are coming thick and fast... some good (pro-business), some bad (potential dislike of the US) and some potentially ugly (strong nationalist tendencies).

Via Brahma Chellaney via The Diplomat,

After a prolonged period of political drift and paralysis, India’s new government will be led by a man known for his decisiveness. Just as Japanese Prime Minister Shinzo Abe’s return to power in late 2012, after six years of political instability, reflected Japan’s determination to reinvent itself as a more competitive and confident country, Narendra Modi’s election victory reflects Indians’ desire for a dynamic, assertive leader to help revitalize their country’s economy and security.

Like Abe, Modi is expected to focus on reviving India’s economic fortunes while simultaneously bolstering its defenses and strengthening its strategic partnerships with likeminded states, thereby promoting regional stability and blocking the rise of a Sino-centric Asia. The charismatic Modi – a darling of business leaders at home and abroad – has promised to restore rapid economic growth, saying there should be “no red tape, only red carpet” for investors.

The 63-year-old Modi mirrors Abe’s soft nationalism, market-oriented economics, and new Asianism, seeking close ties with Asian democracies to create a web of interlocking strategic partnerships.

In a country where the gap between the average age of political leaders and citizens is one of the world’s widest, Modi will be the first prime minister born after India gained independence in 1947. This constitutes another parallel with Abe, who is Japan’s first prime minister born after World War II.

There is, however, an important difference in terms of the two leaders’ upbringing: While Modi rose from humble beginnings to lead the world’s largest democracy, Abe – the grandson and grandnephew of two former Japanese prime ministers and the son of a former foreign minister – boasts a distinguished political lineage. In fact, Modi rode to victory by crushing the dynastic aspirations of Rahul Gandhi, whose failure to articulate clear views or demonstrate leadership ran counter to the Indian electorate’s yearning for an era of decisive government.

Modi, like Abe, faces major foreign-policy challenges.India is home to more than one-sixth of the world’s population, yet it punches far below its weight. A 2013 essay in the journal Foreign Affairs, titled “India’s Feeble Foreign Policy,” focused on how the country is resisting its own rise, as if the political miasma in New Delhi had turned the country into its own worst enemy.

Many Indians want Modi to give a new direction to foreign relations at a time when the gap between India and China in terms of international stature has grown significantly. India’s influence in its own backyard – including Nepal, Sri Lanka, and the Maldives – has shrunk. Indeed, Bhutan remains India’s sole pocket of strategic clout in South Asia.

India also confronts the strengthening nexus between its two nuclear-armed regional adversaries, China and Pakistan, both of which have staked claims to substantial swaths of Indian territory and continue to collaborate on weapons of mass destruction. In dealing with these countries, Modi will face the same dilemma that has haunted previous Indian governments: the Chinese and Pakistani foreign ministries are weak actors. The Communist Party and the military shape Chinese foreign policy, while Pakistan relies on its army and intelligence services, which still use terror groups as proxies. The Modi government is unlikely to let another Mumbai-style terrorist attack staged from Pakistan go unpunished, employing at least non-military retaliatory options.

Restoring momentum to the relationship with the United States – damaged recently by grating diplomatic tensions and trade disputes – is another pressing challenge. But Modi’s commitment to pro-market economic policies and defense modernization is likely to yield new opportunities for US businesses and lift the bilateral relationship to a new level of engagement.

America’s strategic interests will be advanced by likely new defense cooperation and trade that boosts U.S. arms sales and creates avenues for joint military coordination. The U.S. already conducts more military exercises with India than with any other country.

Modi is the sort of leader who can help put U.S.-India ties back on track and boost cooperation. Yet there is a risk that his relations with the U.S., at least initially, could be more businesslike than warm, owing to an American slight that is hard for him to forget. In 2005, the US government revoked his visa over unproven allegations that he connived in Hindu-Muslim riots in 2002, when he was Chief Minister of Gujarat. Even after India’s Supreme Court found no evidence to link Modi to the violence, the US continued to ostracize him, reaching out to him only on the eve of the recent election.

With the US having expressed no regret for its revocation of his visa, Modi is unlikely to go out of his way to befriend the U.S. by seeking a White House visit. Instead, he is expected to wait for US officials to come calling.

By contrast, Modi is likely to remember states, such as Japan and Israel, that courted him even as the U.S .targeted him. Modi’s 2007 and 2012 visits to Japan opened new avenues for Japanese investment in business-friendly Gujarat.

Moreover, Modi has forged a special relationship with Japan and built personal rapport with Abe. When Abe returned to power, Modi congratulated him with a telephone call.

Modi’s victory is likely to turn Indo-Japanese ties – Asia’s fastest-developing bilateral relationship – into the main driver of India’s “Look East” strategy, which, with America’s blessing, seeks to strengthen economic and strategic cooperation with US allies and partners in East and Southeast Asia. Abe, who has sought to build security options for Japan beyond the current US-centric framework, has argued that his country’s ties with India hold “the greatest potential of any bilateral relationship anywhere in the world.”

A deeper Japan-India entente under Abe and Modi could potentially reshape the Asian strategic landscape. It is no surprise that Abe rooted for a Modi victory.

But it's not all silver linings... (as The Diplomat's Ankit Panda notes)

The BJP’s massive margin of victory might yield a new type of Indian politics, effectively reducing parliamentary barriers to passing new legislation. With 274 seats, the new prime minister and his party will be able to maneuver whatever measures they see fit through parliament without the hassle of having to deal with often-fickle coalition partners or a recalcitrant opposition. It remains to be seen how the BJP will manage its coalition partners within the NDA. The smaller parties within the NDA, including the Shiv Sena and the Telugu Desam Party, might find their influence wane within the coalition given the BJP’s majority. Additionally, the outcome in the next Rajya Sabha (the upper house of India’s bicameral legislature) elections will likely moderate the BJP’s ability to wield power unchecked — the party is expected to be the minority in the Rajya Sabha.

Even before the NDA had conclusively reached a majority in parliament, investors took the took India’s SENSEX Index to an all-time high, bringing the Indian Rupee to a 10-month high against the U.S. dollar as well. Modi and the BJP are widely perceived to be able to succeed economically where the Indian National Congress failed. Although the BJP will not immediately reverse several of the Congress’ populist schemes that have driven the Indian government into fiscal unease, it is expected to address broader economic issues such as inflation and development. Part of Narendra Modi’s popular appeal is also rooted in his image as a politician free of the taint of corruption.During the UPA’s 10 years in power, several high-profile scams exposed corruption at the highest levels of Indian government, jading voters and driving them to the BJP.

Among Modi’s critics, concerns will persist about the future of India’s secularism and the fate of India’s Muslim minority. Modi’s record as the chief minister of Gujarat has come under incessant scrutiny by observers both in India and abroad. Some allege that his complicity in the deadly 2002 Godhra riots that resulted in the deaths of hundreds of Muslims render him unfit to lead a country as pluralistic as India. Despite widespread concern, both in India and abroad, it appears that Indian voters have chosen to elect Modi on the merits of his economic vision rather than whatever his views towards India’s Muslims might be. The BJP as a whole is a Hindu nationalist party, influenced heavily by the often-militant Hindu organization, the Rashtriya Swayamsevak Sangh (RSS).

Overall, these elections demonstrate that Indian democracy is functional where it counts: holding a government accountable for poor political, economic, and social outcomes. It remains to be seen if the BJP will deliver what India’s voters want, but for now, the party seems to have won the broadest mandate of any single party in Indian politics in decades.

And, from Morgan Stanley,

Reforms Are Critical...

The two key variables that will be critical in reviving India’s growth trend are: (a) improvement in the external environment and (b) a pickup in the pace of structural reforms. Our global economics team expects that global growth will improve further to 3.7% in 2015, moving closer to the last 30 years’ average, giving us the confidence that the external environment will be supportive of India’s growth recovery.

Policy reforms at home will be even more critical. Over the past five years, the government’s policy was focused more on redistribution and less on boosting productive income growth. Moreover, bureaucratic hurdles and corruption-related investigations have exacerbated the challenges of weak demand and low corporate confidence. This has held back the much needed capex cycle and has been a drag on economic growth.

And Imperative

Overhauling bureaucratic processes and enacting reforms to lift sustainable growth is imperative. The macro stability risks of higher inflation, a wide current account deficit and asset quality issues in the banking system associated with such a policy approach has forced a recognition among policy makers of the need to pay greater attention to reviving the productive dynamic.

Higher economic growth rates are needed to generate the productive employment opportunities for India’s large and growing working age population. Moreover, India’s literate and well-connected middle class is now reaching critical mass.

It seems the visa issues have been cleaned up (having sacrificed the ambassador):

President Barack Obama tonight congratulated Narendra Modi for his electoral victory during a telephone call and invited him to visit the US at a mutually agreeable time to further strengthen the bilateral ties.

"The President invited Narendra Modi to visit Washington at a mutually agreeable time to further strengthen our bilateral relationship," the White House said following the maiden telephonic conversation between the two leaders.

The phone call was stated to be brief.

Modi, during his US visit would be eligible for an A-1 visa, State Department Spokesperson Jen Psaki said.

"The Prime Minister of India will be welcomed to the United States. As Head of Government, Modi would be eligible for an A-1 visa," she said.

We assume the US needs all the friends it can right now.

India's BJP set for landslide poll win

Opposition Hindu nationalist party, headed by Narendra Modi, takes unassailable lead over ruling Congress party.

Last updated: 16 May 2014 12:41

Narendra Modi will most likely be the next prime minister of India [AFP]

India's Hindu nationalist opposition Bharatiya Janata Party is on course for a landslide victory in the parliamentary elections, making an unassailable lead over the ruling Congress party, partial results show.

Narendra Modi, the BJP's leader, will most likely be the next prime minister of India, with early results on Friday showing his party headed for the biggest victory the country has seen in 30 years.
Partial results showed the BJP winning more than the 272 seats required for a majority on its own in the 543-seat parliament, with victories by its allies taking it easily in excess of 300.
Speaking in the capital, New Delhi, the BJP leader Rajnath Singh said "The poor, the weak...This party belongs to everybody."
"This is the time when you can write about India's success story."
Modi, the 63-year-old son of a low-caste tea seller tainted by anti-Muslim violence in his home state of Gujarat in 2002, wrote on Twitter that "India has won. Good days are coming".
Prime Minister Manmohan Singh has called Modi to congratulate him on the victory, Singh's office said in a Tweet.
The stunning results exceeded all forecasts. Firecrackers exploded at BJP offices around the country and sweets were handed out in celebrations that began only a few hours after the first figures filtered out.
"This is the beginning of change, a people's revolution and the start of a new era," senior BJP leader Prakash Javadekar told AFP news agency at party headquarters in New Delhi.
Congress concedes defeat
The leaders of Congress party, Sonia and Rahul Gandhi, admitted personal responsibility for the disastrous election results.
"We understand that victory and loss is part of democracy," party president Sonia told reporters in New Delhi.

Analyst: Reviving India's economy not easy for Modi

"We respect this decision. I take responsibility for this defeat," she said.
The Congress party, that has run India for all but 13 years since independence, was set to crash to its worst ever result after a decade in power.

The election commission was expected to announce full results later in the day. But early trends suggested that the BJP would earn enough parliamentary seats to create a government without forming a coalition with regional leaders.
Al Jazeera’s Sohail Rahman, reporting from New Delhi, said: "Modi has taken the pains to tell the community-at-large that everyone will prosper under his government."
"It is inevitable that countries like Bangladesh and Pakistan will be eyeing this very carefully," he said.
Al Jazeera’s Kamal Hyder reporting from Islamabad, said there is are some fears from the Pakistani side, but the Pakistan Prime Minister Nawaz Sharif has said he is looking forward to a positive relationship.
“Even though there is optimism things will move forward, there are apprehnsions,” Hyder said.
Meanwhile, Al Jazeera's Anmol Saxena, Nidhi Dutt, Baba Umar, Faiz Jamil and Karishma Vyas have been posting on Twitter about the elections, and early celebrations at BJP headquarters.
There was a record turnout in the elections, with 66.38 percent of the 814 million eligible voters casting ballots during several stages of the six-week ballot. Turnout in the 2009 elections was 58.13 percent.
There is widespread dissatisfaction with the ruling Congress Party, which has been plagued by repeated corruption scandals.
The BJP made promises of economic growth and better governance in a well-financed campaign.

The Indian Election Is Over: The Full Summary

Submitted by Tyler Durden on 05/16/2014 07:56 -0400

Bond

Gross Domestic Product

India

Nomura

Tata

Didn't follow tonight's historic election in India (which caused the local market to surge as much as 6.2% at one time hitting an all time high) which has left the nation with a "general feeling of euphoria"? Then this full recap of what just happened, courtesy of Bloomberg, is for you.

Congress party President Sonia Gandhi concedes defeat after coalition led by Narendra Modi’s opposition Bharatiya Janata Party sweeps Indian election.
BJP bloc leads in 335 seats and Congress-led bloc in 59, according to NDTV tally of count as of 4:39 p.m. in Mumbai.
BJP alone set to cross majority mark of 272 seats from 543 up for grabs: Election Commission data
“India has won,” Modi says on Twitter
BJP poised for biggest victory for any single Indian party in 30 years on pledge to revive growth, improve governance
Congress heading for wost-ever performance after graft scandals, economic slowdown, elevated inflation

TALLY

BJP, allies leading in 335 seats
Congress, allies: 59
BJP alone: 285
Congress alone: 46
Modi wins Vadodara, Varanasi seats: NDTV
Congress party VP Rahul Gandhi in close contest in Amethi

MARKETS

Rupee strengthens 0.5% to 58.975 per dollar as of 4:40 p.m. in Mumbai after rising to 11-month high; Sensex closes up 0.9% at record, paring earlier surge of 6.2%, which was most in five yrs; 10-year govt bond yield rises to 8.83% from 8.78% yday
RBI is in the market to check the rupee’s gains, according to four dealers who declined to be identified because the information isn’t public
“Will be selective about what to buy, given the excitement we have in Indian markets,” Adrian Lim, senior investment manager at Aberdeen Asset Management Asia, says in interview to Bloomberg TV India
“General feeling of euphoria” on hopes of foreign inflows, says Killol Pandya, Mumbai-based senior debt fund manager at LIC Nomura Mutual Fund, adding “issues such as inflation remain”
Pandya says breach of 8.735% for the 10-year yield is critical based on technical patterns, and that “yield trajectory may see a steep fall if 8.65% is breached”

EXIT POLLS

NDTV-Hansa Research: BJP, allies to win 279 seats; Congress bloc 103; others 161
India Today-Cicero: BJP bloc to get 261-283 seats; Congress bloc to get 110-120 seats; other parties to win 150-162
Bloomberg TV India-CVoter: BJP bloc to get 289 seats; Congress bloc to get 101 seats; other parties to win 153
Today’s Chanakya: BJP bloc to win 340 seats; Congress-led alliance seen winning 70; other parties 133
ABP News-Nielsen: BJP grouping to win 281 seats; Congress alliance seen getting 97 seats; others 161; Aam Aadmi Party to win 4 seats; surveyed 183,623 voters
CNN-IBN-Lokniti-CSDS: BJP alliance to win 274 to 286 seats; Congress and allies may get 92 to 102 seats

BLOOMBERG EXCLUSIVES

ELECTION & MARKETS

Goldman Sachs

Simple majority would ensure stable govt over 5-yr term with room for “meaningful” economic policy overhaul; 3-mo. USD/INR target 58.5 per dollar; long-tenor bonds to rally

Barclays

If BJP bloc wins less than 200 seats: unclear mandate would cause “knee-jerk” rupee drop to 63.31 per dollar; 10-yr govt bond yield may rise to 9.10%
BJP bloc wins 200-230 seats: uncertain mandate would cause rupee drop past 61; 10-yr govt bond yield rises to 8.80%-9.10%
BJP bloc wins 230-255 seats: probability that this alliance would form govt would cause “modest” rupee appreciation; 10-yr govt bond yield to stay between 8.60%-8.75%
BJP bloc wins 255-280 seats: comfortable mandate would cause rupee gain toward 59, USD/INR risk reversals to drop; 10-yr govt bond yield falls toward 8.55%; high probability that S&P will raise outlook on India sovereign rating to ‘stable’ from ‘negative’
BJP bloc wins more than 280 seats: Very strong mandate would cause rupee gain toward 58; 10-yr govt bond yield falls toward 8.55%; High probability that S&P will raise outlook on India sovereign rating to ‘stable’ from ‘negative’

Espirito Santo

“Cautiously optimistic” on post-exit poll exuberance; positive election outcome could further spur business confidence and market “ahead of fundamentals”
Base scenario: 5.4% FY15 GDP growth, a “mild” rupee appreciation to 58.00 per dollar in 3-6 mo., higher interest rates “for longer”
In “extremely positive” scenario: 10% rupee appreciation in 12 mo.

EARLIER STORIES

Modi Set to Rule as BJP Bet on One-Man Campaign Pays Off
Indians Expect Modi to Be an Economic Superman
Meet the Man Who Has the Hardest Job in Economics
Modi Calls for India Unity as Exit Polls Signal He’ll Win
Stocks Rise to Record as Polls Show Modi Win; Rupee Gains
Wives Revolt as Free Election Booze Leaves Trail of Widows
Escalating Reliance, Vodafone Spats Await Next Government
Torched India Shop Shows Riot Risk as Muslims Wary of Modi
Is India’s E-Voting a Turn for the Better?
Modi In-Laws Laud Acceptance of Teen Bride After Decades
Modi Says His Economic Priority Would Be Job Creation
Bridge Unbuilt Shows Gandhi Family’s Fading Promise
Adani’s $4.1 Billion Wealth Surge Fuels Modi Attacks
Indian Women Ignoring Their Husbands as Voting Power Rises
Rajan Must Be Respected by Incoming Government: Chidambaram
Modi Mutiny Risk Looms as Top BJP Woman Muted in India Vote
Next Govt Will Need Credible Deficit-Cut Plan: RBI Adviser
Lawyer Seen as India Finance Chief Woos Punjab in First Poll
Rajan Job Safe If Modi Wins India Polls, BJP Treasurer Says
Indians Abroad Eye Election Role as Rape Hits Nation’s Image
Modi Targets Urban Voters Who Stayed Home in India Poll Push
Trader Abandons Congress for BJP as Modi Spurs Sensex Gain
Goats-for-Votes Pose India Deficit Risk as Poor Lack Toilets
Gandhi Says He’s Ready to Be India Prime Minister: CNBC
Three Female Kingmakers Hold Key to Modi’s India Power Bid
Election Panel Asks Media to Stop Publishing Opinion Polls
Deadly Squalor May Spell Victory for Hindu Nationalists
Modi’s 72-Hour Tata Coup Shows States Key to India Revival
Modi Doesn’t Need to Apologize for Anti-Muslim Riots: BJP
India Upstart Tries to Destroy Modi Momentum in Ganges Clash
Hindu Campaigners Backing Modi Risk Spooking India Allies
Rupee Gains of 35% Seen in Decisive Victory for Modi

Source:

Catharsis Ours

Friday, May 16, 2014

Narendra Modi: The Good, The Bad, & The Ugly

India's BJP set for landslide poll win

Opposition Hindu nationalist party, headed by Narendra Modi, takes unassailable lead over ruling Congress party.

The Indian Election Is Over: The Full Summary

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