India's competitive politics and outcomes

Fund managers and market analysts must stop fretting about 'big bang' reforms

- TT RAM MOHAN

It wasn't just the exit polls and self-styled poll I experts who got their forecasts for the 2024 gen- placed than a and fund managers didn't fare much better either.

The investment bank Nomura, for instance, reported the results of a survey of around 150 investors carried out from May 21 to May 27. Eighty-three per cent of those polled expected the Bharatiya Janata Party (BJP) to get a simple majority on its own, with 36 per cent expecting the BJP to fare better than in 2019. On average, respondents expected the National Democratic Alliance (NDA) to win 344 seats, not very different from the forecasts of exit polls.

Fund managers and market analysts claim that they now reach out into the Indian hinterland and talk to manufacturers, vendors, consumers and others in arriving at a view on the economy, sectors and companies. If they could go so wrong with their poll forecasts, one can only hope that their judgement of individual companies and sectors is a little better.

Investors' views on election outcomes seem terribly superficial. In the Nomura survey, investors expected the Indian economy to grow at 7-8 per cent if the NDA government returned to power; if the INDI (Indian National Developmental Inclusive) alliance won, growth would dip below 6.5 per cent. Why? Because, as Nomura said in a note that followed the exit polls, "If the BJP returns with renewed majority, it should have the political capital to push through meaningful reform". In contrast, an INDI government would mean a continuation of the status quo.