With India’s elections coming to a close, Mohsin Jameel, CEO of TradeNext, one of the UK’s first Indian owned FX & CFD brokers regulated under the Financial Conduct Authority, believes that hardship and uncertainty will be the major factors that will determine the result for the world’s largest democracy. Mr Jameel forecasts a never seen before - hung parliament with favourites, BJP-NDA, unable to form a majority government through their coalition partners. “The rupee could dive and cross a new low, 70 against the dollar is a real possibility.”
He adds, “The BJP has built-up a strong opposition case, with the economy and governance at the forefront of its campaign. The Congress Party has been under the radar for the 2G scam, which involved government officials, bureaucrats and politicians illegally undercharging mobile telephony companies for licences. Adding salt to the wounds is the current state of the economy, with the rupee plunging and economic growth being below 5%; a serious dilemma for the BRIC’s nation.”
Mr Jameel believes neither of the two giants have a chance to take the hot seat by themselves. Whilst they both have their respective strong holds, with historic voter empathy, young India is looking for fair and transparent policies as well as wanting real change. The underdog, the Aam Aadmi Party led by Arvind Kejriwal, has made people think, beyond the current domain of the Gandhi family vs the pro-religious union.
In the post-election India, Kejriwal et al, will certainly have a seat on the dinner table. However, a hung parliament is a real possibility, which is bad for business, the economy and the rupee. Mr Jameel expects the current stable range will break through the 70 rupee to the dollar mark, crossing new boundaries as India’s elite looks to divert investments outside India.
He concludes, “In its 67 year history, the country has never faced such circumstances with Congress, Janata Dal or BJP always taking power.
“Polls are gearing towards a BJP lead pact with the rupee taking a short term gain, ranging around the 60 mark. However, if a balanced parliament takes charge, confusion of whom and how the government proceeds will be a critical factor. The recent re-bound could potentially be wiped out.”
Mohsin Jameel has been nominated at the Indian Business Awards 2014 for the Leadership in Finance category, taking place on Friday the 16th of May in Birmingham.