THE BLOG

India Five Weeks From a New Promise

10/04/2014 17:13 BST | Updated 09/06/2014 10:59 BST

Over the course of the next five weeks, India will take part in what has been called the "largest democratic exercise on the planet"; choosing the constituent members of the lower house of Parliament, and with it, the Prime Minister that will lead 1.2 billion people.

The figures of this election are mind-boggling. By the time that the election is over, as many as 815million votes could have been cast between six national parties - the main two being the Indian National Congress and the opposition Bharatiya Janata Party - and around 50 separate individual state parties with voting taking place at more than 925,000 voting stations.

For all the marvel that this political circus is able to cast upon us as observers, there is an equal and opposite desire for transparency and better government going forward. Through last August and September of last year, we saw massive weakness in the Indian rupee and other emerging market currencies as a result of the increased chance that we would see some form of reduction in the amount of stimulus that the Fed was pumping into the markets.

Emerging markets have used these flows as short term funding for capital projects; a fall in these means less investment, lower GDP and a lower currency.

India was hit harder than most during this period as massive structural issues resulting in poor government kept barriers to trade strong, inward foreign investment difficult and incoming business from abroad mired in red tape.

The ruling Indian National Congress has presided over a slowing of an economy that could and should be rivalling that of China at the moment. Growth in 2004 was 8.5%, it is now closer to 5% and GDP per capita is four times higher in China than it is India, although China's Gini coefficient - a measure of income equality - is slightly higher than India's (0.47 vs 0.32). This matters little to us at the moment; had the necessary reforms had been put in place then everyone would have been richer in India.

So it looks like the challenging Bharatiya Janata Party will take the win when the polls close in early May. Their leader and candidate for Prime Minister Narendra Modi has had very little economic training in his time as a professional politician. Supporters point to his success in the transformation of the state of Gujarat under his Chief Ministership.

Growth in Gujarat has been strong but, as someone once told me, growth for growth's sake is the business model of a cancer cell. Higher spending on infrastructure such as roads, ports and power lines has not translated into economic development for the inhabitants of the state. 'Modinomics' - as it has been called - has benefited few with corruption so ostensibly at the heart and soul of Indian politics.

The numbers within this economy and election are staggering and yet the most important is zero. If corruption can be lessened then the election will be a step closer to delivering the promise that the world's largest democracy deserves.