Wednesday, April 1, 2009

[Investors Please Listen] India Election Watch II - coalition politics to overshadow national issues


Anti-incumbency: Will it come into play in 2009?

Since 1984, (barring NDA's return in 1999 after its 13-month government), every successive government has been a victim of anti-incumbency. Factors like weak minority government (1977-80, 1989-91, 1996-98), corruption and factions (1996), regional issues (1998), and failure of economic growth to reach masses (2004) have led to ouster of incumbent governments and enable new parties coming into power via coalitions. In 2009, opposition parties are likely to target the UPA government on the following issue that are concerning the Indian electorate today:

    Sharp economic slowdown, resulting in high unemployment in labour-intensive sectors like textiles, manufacturing, and gems & jewellery.

    Rising prices have affected the common man the most. This is likely to be another weapon in the opposition's armory.

    Recent terror attacks on Indian cities have invoked extreme anger and intolerance among citizens (especially the Mumbai attacks).

 

However, the United Progressive Alliance (UPA) is likely to reap benefits for its commitment to rural masses and the common man. Further, in recent key state assembly elections (Delhi, Rajasthan, and Madhya Pradesh), the Indian National Congress (INC) has performed better than expected.

 

Alliances (pre- and post-poll) to decide structure of new government

Despite important national issues, the complexity and randomness of regional politics is likely to dominate national politics during the 2009 election.

    Currently, the two largest parties—Congress and BJP have only 52% of seats in the Parliament. The initial seat sharing arrangements for 2009 election have resulted in both the parties contesting fewer seats than in 2004.

    Regional parties (especially in select states) show volatile performance as they tend to have specific issues.

    Moreover, emergence of new parties within key states (Maharashtra - MNS, Tamil nadu-DMDK, and Andhra Pradesh-Praja Rajyam) could divide votes in the current election, further complicating alliances.

 

Ironically 2009 elections will witness pre and post poll alliances to play a much bigger role than the underlying issue of the electorate.


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The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
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