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Voting for prosperity

Ultimately, investors and citizens require the same set of enabling conditions to prosper. It seems that whatever prosperity either class has achieved in India has been in spite of the governments, not because of them.

Dipen Sheth | Print Edition: April 16, 2009

Dipen Sheth
Dipen Sheth

As the Lok Sabha polls approach, it is pertinent to ask, 'Do these elections really matter?' Of course, they do! After all, we are going to elect a new government which will set the policies that can affect the investing environment over the next five years. We could have a third-front coalition led by a charismatic Mayawati, or we could go back to the remote-controlled but predictable government of Manmohan Singh. And, what if the BJP-led NDA pulls off a surprise?

No matter who wins or how stable the ruling coalition is, here are two big things that will happen. Unfortunately, these are the things that really matter for investors, and indeed, for the citizens of India.

No rule of law: Yes, that's right. We don't really have a rule of law in this country. Ministers abuse power and thugs break the law with impunity. Corporate chieftains siphon off money from companies and stash it in Swiss banks. Officials turn a blind eye. It has been like this for decades and has hardly changed in the 'Bharat' we ignore, while we fawn over the 'India' that's shining.

Tell me, which sensible man would want to be part of this mad dance of pseudo-democracy? If you think that your favourite party is going to change things, you are a blindsided propagandist.

Lopsided policies: Whichever party or coalition is ruling, you can expect unfair largesse for its 'subjects'. The Congress is in a hyperspend mode and is doling out largesse irrespective of the precarious state of government finances. The notable beneficiaries of this skew are central government employees and the city of Delhi (at the cost of other cities). Mayawati will naturally indulge in positive discrimination in favour of the SC/ST and OBC population, while the BJP and its allies will pursue their own socio-economic agenda.

The Leftists would, if their manifesto is to be believed, kill whatever little investing charm is left in this country. They plan to make lay-offs impossible, ban contract farming, stop PSU divestment, actively invest in all PSUs and restore long-term capital gains tax.

And yes, there are worse policies mentioned in the election manifestoes if we look at other regions… you can imagine the arbitrary favours that parties like the Telengana Rashtra Samiti, Shiv Sena, AIADMK, JMM, etc, would hand out to citizens.

Ultimately, investors and citizens require the same set of enabling conditions to prosper, and it seems that whatever prosperity either class has achieved in this country has usually been in spite of the governments, not because of them. If only it were otherwise.

These are the author's personal views and in no way reflect those of his company or of Money Today.

Dipen Sheth is Vice-President, Institutional Equities, BRICS Securities Ltd. He can be reached at dipen.sheth@bricssecurities.com.

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