主题：【文摘】只有一小部分人富裕的结果－－看印度大选 -- 西风陶陶

Bloomberg Columnists

William Pesek Jr. is a columnist for Bloomberg News. The opinions expressed are his own.

India's Election Is Wake-Up Call for Markets: William Pesek Jr.

May 14 (Bloomberg) -- Atal Bihari Vajpayee's election slogan was ``India Shining.'' The millions who don't feel part of the magic retorted with their own: ``We won't feel ignored.''

And they gave Sonia Gandhi's Congress party a victory over the 79-year-old Indian prime minister, who was so confident of re- election that he called elections six months early.

Vajpayee's biggest misstep, and the one many global investors will long fault him for, was not doing more to deepen economic growth in the world's second most populous nation.

His successes are well known: the fastest economic growth in 15 years, global information-technology clout, rising stocks, increased state asset sales and a huge pool of currency reserves. Good stuff if you're a member of India's 245-million-strong middle class. But if such trends don't trickle down to the other 700 hundred million, someone's going to pay. That someone was Vajpayee -- and his Bharatiya Janata Party.

``It seems that the BJP's `India Shining' campaign has backfired,'' says Samir Mehta, who helps manage about $3 billion for Lloyd George Management in Hong Kong. ``There were people who looked at that and realized that their lives hadn't benefited.''

It's something that's often missed by investors observing India's 8 percent growth rate. The government's top-down economic policies are winning glowing accounts in the global media and wooing capital back to Asia's No. 3 economy.

Providing the Basics

Like Vajpayee, though, many investors mistakenly associate rising stock prices and foreign direct investment with helping the vast majority of India's 1 billion people. And most of the population has nothing to do with the gleaming, high-tech call centers of Bangalore or Hyderabad.

Glossy magazine articles on India's entrepreneurs and yuppies rarely touch on the hundreds of millions of rural poor living at the margins -- and out of the spotlight. For many, life is a daily search for just potable water, never mind education, jobs and homes. Hundreds of millions in India simply don't have the basics.

Why does all this matter to global investors? Increasing prosperity at every level of Indian society is in their interest, and the process remains a slow one. Only when more Indians feel part of their nation's economic boom will they become the rabid consumers multinational companies seek. Only then will jaw- dropping elections like this one stop roiling markets.

Gandhi's Focus

Bond, stock and currency investors were taken aback by one of the biggest political upsets since India's independence almost 60 years ago. The 57-year-old Gandhi's late husband and mother-in- law were both Indian prime ministers who were killed by assassins. She is an Italian-born Catholic, and she'll now be running the world's biggest Hindu nation. She'll also rule the world's biggest democracy with the support of Communist parties.

Arguably, Gandhi won because she focused her campaign on the 300 million or more people who exist on less than $1 a day. She spoke early and often about bringing clean water, electricity and basic infrastructure to the rural poor.

Now, of course, it's time for Gandhi's party to turn pledges into action, and voters will be watching. She promised to deliver 10 percent growth a year, pursue the sale of state assets, spend more on power generation and restrain government borrowing so bond yields stay low.

There's reason to think investors need not worry too much. If India's disparate political parties agree on anything it's the need for economic reform. China's boom leaves officials in New Delhi little choice in the matter. And there's a powerful inertia in place leading India toward increased global competitiveness. The same can be said of peace with Pakistan.

Selling State Assets

The central bank, meanwhile, has cut its loan rate to commercial banks by 2 percentage points over three years to a 31- month low of 6 percent. This, along with lower government debt yields, is helping to spur economic growth.

The wild card is privatization. India sold a record $3.5 billion of state assets in the year ended March 31, including a stake in Oil & Natural Gas Corp. That swelled its foreign exchange reserves to a record $118.5 billion. Continued asset sales are crucial to pay for infrastructure, education and poverty reduction. Investors view the process as a litmus test for investing there.

Gandhi may be reluctant to sell off majority stakes in profitable state-run companies. The bigger question is whether she will slow privatization efforts in general to woo socialist parties, which oppose asset sales, to shore up her government. Any missteps here will trickle into financial markets and spook the very foreign investors India has been attracting.

The Rural Poor

India's rural poor are another force with which to be reckoned. They showed their political clout this week by ousting the nine-year government of N. Chandrababu Naidu's Telugu Desam Party from the Andhra Pradesh state assembly. Naidu is a celebrity in India for his role as architect of the nation's success in information technology. The poor weren't impressed, showing just how powerful a force democracy can be.

Investors and the poor often seem at odds in the world of globalization. India's experience shows that the needs and desires of both groups aren't always so far apart. If the government doesn't satisfy those Indians with lots of money and those with none, it will suffer the same fate as Vajpayee.

To contact the writer of this column:

William Pesek Jr. in Tokyo at [email protected].

To contact the editor responsible for this column:

Bill Ahearn in New York at [email protected].

Last Updated: May 13, 2004 16:13 EDT