Planning To Invest Before Elections Or Hold It Back?

- M. Rajendran and Aparajita Gupta

The corridors of power in Delhi are buzzing with grapevine of a possible advancement of general elections to this yearend as against its scheduled time in mid-2019, when the current National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi will complete its five-year term.

Recently, O P Rawat, Chief Election Commissioner, stated that the Election Commission is capable of holding Lok Sabha polls in December, along with assembly elections in Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram. However, “BJP’s track record in advancing elections is not good. Historically, it has gone against them,” says Arun Kejriwal, Founder, Mumbai-based advisory firm Kejriwal Research. Riding high on the India Shining campaign, the Atal Bihari Vajpayee-led NDA had advanced the elections by six months in 2004, which did not work to their advantage.

Further, it is being strongly debated how early polls would impact the markets and the economy, which will adversely affect individual investors. Economist Arun Kumar argues that the Indian economy is not in good shape and the numbers projected by the successive governments are completely misleading. The governments have been consistently showing corporate data, which is growing at six or seven per cent, to mark their quarterly growth, but the unorganised sector is lagging by five to six years. He also points out that slow credit off-take and sluggish investment climate are not good signs for early elections. “Individual investment pattern might not change. Though deposits in banks are not rising, there is a sharp rise in mutual fund investment, which is directly impacting the stock market,” Kumar says adding, “But small-cap and mid-cap have done badly and that might impact individuals’ investment decisions if elections are held early.”