Many people credit India’s Prime Minister Narendra Modi with igniting fire in the bellies of his country’s citizens. He has made bold promises to transform and revolutionise India into a business-friendly, tech-savvy, industrial nation -- he’s India’s version of the staunchly pro-business former UK Prime Minister Margaret Thatcher, if you will.
But if you follow Modi’s moves closely, you’ll find that it’s his right-hand man, finance minister Arun Jaitley, who is the driving force behind the Prime Minister. Jaitley is not only managing the books, he’s also figuring out which pro-growth projects to invest in to ensure India will achieve economic success.
Investors are impressed -- India’s leadership team has invigorated the financial community. Prior to being elected in 2014, markets moved higher on the mere whisper that Modi was leading the polls. Even after he came to power, investors continued to pour money into Indian stocks and ETFs. Over the past 12 months, the Bombay Sensex has gained roughly 30 per cent, making it one of the year’s best performing stock indexes in emerging markets.
The outperformance in Indian equities has prompted many to question whether investors are overly optimistic about what Modi – and Jaitley – can achieve in the coming months.
I posed that question to Jaitley at a UK India Business Council event in London and he insisted that investors are “always realistic.”
“Investors know the market much better than you and me, and therefore investors will assess the steps which are being taken and realistic conditions right now,” he said.
I pushed harder and asked if there was too much euphoria in the Indian stock market.
“Well, I think markets aren’t the best representative of the economy. Markets move on their own logic,” Jaitley added.
The finance minister of India, known for his calm and collected approach, said he did not think the market had lofty expectations. In fact, he’s convinced India will see growth of 7.4 per cent in 2015 – an expansion rate the US and UK could only dream of.
If Jaitley overpromises and underdelivers, however, market gurus say it will not only tarnish his reputation, but also cast doubt on whether India’s government can deliver the economic miracle citizens and investors are yearning for.
If that happens, and India is not able to grow into the superpower it wants to be, or the Indian government admits that the changes needed to rebuild the country will take more time than anticipated, be careful not to point your finger soley in the direction of Modi.
After all, the man behind India’s growth story is not only Modi; Jaitley also has a large part to play.
Seema Mody is co-anchor of Worldwide Exchange on CNBC.
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