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Everyone believes that the market mania would continue on Modi mantra. Already, the Modi wave has taken India into the prestigious league of 10 biggest global stock markets by value for the first time. The total marke..

09 Jun 2014

Indias stock market has been rising and rising ever since Narendra Modi captured the minds and hearts of voters with a historic, thumping electoral win. The benchmark stock market indexSensexis shooting up to witness new highs every day.

Stock market pundits are predicting a sustained rally in financial markets in the days and months to come, basing their reason on expectations that the new Modi government would indeed take a series of proactive reforms to stir the economy.

Everyone believes that the market mania would continue on Modi mantra. Already, the Modi wave has taken India into the prestigious league of 10 biggest global stock markets by value for the first time. The total market capitalization of Indian companies has shot up by nearly 30% in 2014 solely on the euphoria that the Modi mania has created.

Modi and his Cabinet team are yet to announce any major policy decisions; key bureaucratic appointments are being carried out; and Finance Minister Arun Jaitley is busy with the presentation of the national budget soon.

Are the markets over-hyped? Can the markets sustain the current rally? Can Indian economy stage a comeback and shine in the global market in the next five years that Modi is going to be in charge? These are some of the questions in the minds of investors, foreign institutions, stock market analysts, economic experts and common man.

Here are a set of five points that the Modi government could keep in mind for the sustained progress of a nation of 1.2 billion people.

1. There is no quick fix to cure the ills that have afflicted the Indian economy over the years. Prime Minister Modi may not have any magical tips to address and solve the innumerable social, economic and agricultural problems at a short notice. But people have voted Modi to power expecting that his government would take corrective measures to heal the wounds that marred crucial sectors such as manufacturing, agriculture, industry, energy and infrastructure sectors in India. Right measures with right spirit and right policies with timely administrative action can cure many of these economic wounds.

2. Much of the development that India has witnessed in the last 10 years or so has been on building infrastructure. National highways have been re-built; expressways have been made; real estate boom has created new high-tech cities in the outskirts of cities like Delhi, Mumbai and Bangalore. Metros are being built in major cities; Delhi Metro has received global attention and praise. It is all good and great. But one sector that has been neglected by successive governments is agriculture in India. 70% Indians still live in villages, and agriculture is their mainstay. India is one of the largest consumers and producers of the largest varieties of commodities in the world. But India still lags behind many nations in productive agriculture. The Modi government needs to overhaul policies for better agricultural production in India.

3. One of the first challenges that Modi faces is to create jobs for millions of unemployed youth in the country. Politicians, academics, economists and general public have been crying foul about the rising levels of unemployment in India. It is, indeed, a huge issue because 285 million Indians fall in the 15-29 age group (when they seek skilled and unskilled jobs). It is about 9 % of India’s population of 1.2 billion people. International Labour Organization says unemployment rate in India has been rising in the last three years from 3.5% in 2011 to 3.6% in 2012 and to 3.7% last year. Indeed, joblessness is an issue of financial struggle for millions of families. How best Modi would tackle unemployment is crucial for his political popularity.

4. Make India the global manufacturing and innovation hub. In the last three decades or more, India has lagged much behind countries like China in manufacturing. India needs to step up its manufacturing activity in several crucial sectors like electronics, metals, minerals, energy, petro-chemicals etc. India is the largest consumer of gold in the world. But gold mining has never taken off in India. India is one of the largest markets for mobile phones in the world; but all the smart phones sold here are either made in China, Taiwan or Korea. The Modi government has to create a new national manufacturing policy that would certainly make the economy jump.

5. Address simple problems of the people. Many voters who stamped for Modi in the elections do not expect World Trade Centres to be built in their towns; they do not foresee Express Highways in their villages. But they certainly would expect an over bridge on the road crossing through the railway track in the neighborhood. They would expect roads to be tarred. They would expect drinking water in taps every day. They would expect electricity at homes. Voters dreams are not big. Therefore, Modi needs to get into issues of sanitation, housing, food security, electricity and basic infrastructure to people across the country.

Let the Modi wave be not overhyped. Let the Modi wave continue to be practical for sustained economic growth in India.

George Iype is Managing Director and CEO of Commodity Online Group. He can be contacted at george@commodityonline.com