With or without Communists in the Government

"When I saw the results, I said that I was content to live in this country." This admission of an Indian Economist summed up the enthusiasm of business in India: after weeks of worry, they have literally exploded with joy, yesterday, to celebrate the triumph of the Party of the Congress in the elections. The Bombay Stock Exchange has increased by 14, which resulted in its closure for two hours. After which its main index, the Sensex jumped again. After a hike, a total of 17, the Bombay Stock Exchange has closed for the day. For its part, the national currency, the rupee, made his most spectacular bond in twenty-three years, weighing 3.3 against the dollar.

This reaction was predictable, given the announcement, last weekend, the clear victory of the Congress Party. Having believed, to the end, that the outcome of the vote would be highly fragmented, economists and markets were relieved to see that a clear coalition would lead the India over the next five years. More importantly, the rout of the Communist parties has delighted them. Because the extreme left, until last year, was part of the coalition to power. And not restricted to block many very awaited reforms. When the Government had intended to allow foreign companies to hold 49 of companies in India, the Communists were prevented. Same veto against attempts to open the banking sector. On the opening of the large foreign signs distribution, it also remained in cartons. Insured to govern without the Communists, the Congress has therefore, now, the means to implement his agenda of economic reforms. Hence the euphoria of the Bombay Stock Exchange: it is now betting that the time is resumed. In addition to the few encouraging signals regarding the global economy, the fact is that some markets are left upwards, in India, in the latest week. Thus, in particular, cement or steel. Two signs are hoping that the building and industrial activity will start.

Rural development

It remains that, for the moment, the major macroeconomic data invite to caution. In particular, industrial production, including the latest data available back in March. They are disastrous: a record, ever fall for 16 years, due to a collapse of one-third of exports.

More fundamentally, the Congress never did the Bard of excessive liberalism. Prime Minister Manmohan Singh, who is about to come and go, always focused on "inclusive" growth, never forgetting the rural development. Must be to his Government, among other things, an extensive program of erasing the debt of the peasants and another guaranteeing each poor household a minimum employment. It is especially this permanent focus on the poor which earned him his election victory. Indeed, at the Congress, person has forgotten that the BJP party had lost elections in 2004, while he had to take off the growth of the country over the past five years.

The conclusion is in all minds: a majority of voters make fun of growth, they want a job, income and basic infrastructure. Sensitive reforms of economic openness, including that of the distribution sector for millions of small grocery stores in the country, remain so difficult. With or without Communists in the Government.