Possibility of a weak coalition could unsettle markets
The month long election for ruling the largest democracy of the planet (India) ended on Wednesday, with tens of millions of voters casting ballots in a vote widely expected to usher in a shaky coalition government.
While results are not being announced until Saturday, a slew of exit polls have predicted a split outcome with no party or group getting an outright majority. The main fight is between the ruling Congress party-led alliance and parties led by Bharatiya Janata Party (BJP). The two groups are pitted against a host of smaller regional parties and analysts say the new government is likely to be a coalition with many players.
Though the media polls indicated the Congress party-led ruling coalition could be narrowly ahead of the Opposition NDA yet smaller parties hold the key. This would mean the spotlight will be on smaller regional parties in days to come, whose support for the Congress or BJP will be crucial in deciding who forms the next government in Delhi.
So the race for influencing these small parties has started and all attempts are being made by both the major parties i.e. Congress and BJP to bring more and more small parties in their favour. A party or coalition needs the support of 272 members to rule.
It is clear that the government will be a weak coalition, but the question here is about the rights, expectations and aspirations of voters. What will happen to the choice of those voters who have voted for a particular party against the other, if both join hands to form the government?
The voter will be again betrayed for the lust of power by the political parties’ weather small of big. The intrest of voter in such circumstance counts least for the parties and politicians. Take an example of last Assembly election in Jammu and Kashmir. During campaign both National Conference (NC) and Congress which are today sharing the power, were fuming anger against each other on different issues to influence voters and the voters voted for Congress against National Conference and vice versa. But when it came to share the power of corridors both came together and form the coalition government. In such situation the intrest and choice of voters by thrown to winds fro the lust of power.
Even today rival voters could not face each other but on the other hand those leaders who were making anger speeches against the each other are sharing the dice and enjoying the power putting the common voters in dark.
Same was exercised by the voters in polls for the 15th Lok Sabha (LS). They cast votes in-favour of those parties which they think will come up to their expectations and rejected those parties which they think have failed to safeguard their interests and expectations.
The political leaders too did same and to vow voters did everything to level all allegations against other parties weather small or big and criticized every political of the other party on maximum fronts.
But now same leaders are trying to influence those leaders of the small parties whom they were criticising till couple of days. Such things happing and taking place in the Indian political system are betrayal with the voters.
However, according to the constitution, a new parliament has to be in place by June 2, but with the existing alliances deeply fragile and both main parties set to launch their final quests for allies once the results were officially announced, little in the political scene was clear.
We can only be certain about the uncertainty of it. We will naturally have a coalition. But the final form of that coalition is impossible to predict.
Overall turnout was approximately 59 to 60 percent, the national election commission announced on Wednesday, up slightly from 58 percent in the last national vote, in 2004.
The probable lack of a clear winner has stoked concerns that the coalition that emerges after a month of elections may be unstable and soft-pedal on the next stage of reforms in Asia's third-largest economy, which is striving to be a global player.
India's largest communist party signaled it would do everything possible to stop the opposition Bharatiya Janata Party (BJP) from coming to power.
Three exit polls on Wednesday showed Prime Minister (PM) Manmohan Singh's coalition slightly ahead of the BJP alliance, but both groups needed smaller allies to gain a parliamentary majority.
Prakash Karat, chief of the Communist Party of India (Marxist), has already said “The left parties and our allies in the Third Front will not give BJP an opportunity to exploit the post-poll situation to install its government."
According to political analyst Kuldeep Nayar, “It's all very fluid. Any coalition that comes will be dependent on their constituents and to that extent there could be difficulties. But whatever coalition emerges it has to be followed by another mid-term poll."
Indian shares shed 1.2 percent as investors grappled with the possibility of a weak coalition government emerging from the elections, unable to push reforms and boost sagging growth.
Rohini Malkani, an Economist at Citigroup Global Markets said, “Things are likely to change by the hour due to changing allies, open-ended alliances and regional parties wanting a bigger role," Results for the 545-member lower house of parliament should be known then. A party or coalition needs the support of 272 lawmakers to rule.
Some analysts said that the BJP-led coalition is savvier at alliance building and may have greater success even though the polls show it to be trailing the Congress by a slender margin. The Congress may have to cast its net far and wide to stay in the hunt.
Political analyst Mahesh Rangarajan, said, "For Manmohan Singh or any other person to become Prime Minister (PM) of a Congress-led government, it does not look possible without support from the left."
The communists, who supported the Congress-led alliance for more than four years before angrily parting ways over a civilian nuclear deal with Washington last year, had ruled out backing any future Congress coalition.
But exit polls showed the election may have bruised them, leaving them less hostile to a Congress-led coalition.
Two other parties, the caste-based Bahujan Samaj Party led by the mercurial Mayawati and the All India Anna Dravida Munnetra Kazagham (AIADMK) headed by former actress J. Jayalalithaa, may hold the remainder of the balance of power.
Such a scenario may leave little room for either group to manoeuvre on the economy, because a shaky coalition is seen as unlikely to push key reforms such as raising foreign investment limit in the insurance sector and privatization.
According to Gajendra Nagpal, Chief Executive of Unicon Financial Intermediaries, "If the Congress' lead was larger, the market may have taken it as a good sign. But now that it is just a slender lead, the market may become uncomfortable and think there might be more of a mess in the offing."
After the last election in 2004, Indian markets tumbled on fears that an unstable coalition would soft-pedal on the next stage of reforms in Asia's third-largest economy which striving to emerge as a major global player.
After the last election in 2004, Indian markets tumbled on fears an unstable coalition would soft-pedal on the next stage of reforms in Asia's third-largest economy which striving to emerge as a major global player.
The possibility of a weak coalition emerging from the election could unsettle markets.
According to V.K Sharma, head of research at Anagram Stock Broking, "These exit polls will not assure the market, which is factoring in a lead for the BJP-led alliance. There will be some downside and it will be volatile."
Anantha Nageswaran, Chief Investment Officer, Asia Pacific, Julius Baer in Singapore, said, "There are negative cues globally and we've had a bit of a rally in stocks, so this will be seen as an excuse to take profits." "Investors will think it best to wait for the final numbers."