Indian Economy: Update – History Will See This as a Crucial Milestone for India

New Delhi, 23 July 2008. We reported on the 21 July why Prime Minister Manmohan Singh was ready to risk losing office over the India-US Nuclear Deal.

New Delhi, 23 July 2008. We reported on the 21 July why Prime Minister Manmohan Singh was ready to risk losing office over the India-US Nuclear Deal.

The Congress party led its alliance to a victory that vindicated the Prime Ministers brave stance. However the vote has been marred by allegations that opposition MPs were offered money to buy their votes.

Virtually all the Indian newspapers this morning are focusing on the vote buying allegations, with phrases such as ‘Shame’ and ‘UPA [the Congress-led coalition] wins vote, loses trust’ being splashed all over the headlines.

“History will remember this as the second great achievement of Dr Manmohan Singh, after his economic reforms of the nineties as Finance Minister” said EconomyWatch.com Chief Analyst Hosni Afleck. “Indeed the vote-buying is a shame and a scandal, but not something that has suddenly happened. India’s politics and civil service have long suffered from corruption.”

The India-US Nuclear Deal still has a few hurdles to pass through before it can be enacted. It requires approval by the International Atomic Energy Agency (IAEA), and the Nuclear Suppliers Group. It also must face a final vote in the US Congress.

The left-leaning parties that had supported the Congress within the UPA walked out over the deal, leading to the No Confidence vote.

With Congress now able to govern without having to compromise these leftist groups, there are some hopes that further economic reforms can be pushed through before the next general election, which must be held no later than May. Optimism has helped the Rupee to a seven week high against the US dollar.

Santos de la Raya, EconomyWatch.com