Showing a strong interest in India's general elections, over a dozen global financial giants, including Goldman Sachs, HSBC and Citigroup, are keeping a close tab on these polls and are analysing the likely economic impact of different possible outcomes.
The unprecedented interest shown by these international financial services firms in the ongoing elections, which is the biggest ever electoral exercise in the world, largely stems from India's emergence in the last few decades as a major centre -- both politically as well as economically - on the global landscape.
These firms also include Bank of America Merrill Lynch, Nomura, Barclays, UBS, CLSA, BNP Paribas, RBS, Deutsche Bank, Credit Suisse, Morgan Stanley and JP Morgan.
India, which has a huge market thanks to its large population, is expected to become the third largest economy globally in the next few decades. A change in leadership at the Central level, along with changes in policies of the government, will have a direct repercussion on global front.
Most of the global financial services majors believe that Narendra Modi, the Prime Ministerial candidate of the BJP, is a clear front runner and describe him as more business friendly, shows an analysis of surveys conducted by these firms for internal use and for the benefit of large clients.
The observations assume significance as they come at a time when a political debate is underway on the comparison between so-called growth model of Modi-led Gujarat and that of other states ruled by Congress and other parties.
BJP is trying to wrest power from Congress at the Centre. Giving thumbs up to the Gujarat business model, a Goldman Sachs study said that 40 million new manufacturing jobs can be created in a decade if states follow flexible labour laws like in Gujarat.
In November 2013, Goldman Sachs had come under sharp attack from government and the Congress over upgrading Indian markets on a likely Narendra Modi election win.
Analysing the Indian elections, economists from leading foreign fund houses like Credit Suisse, BNP Paribas and Bank of America Merrill Lynch said that Indian economy is much more dependent on the global economic cycle than who rules in New Delhi.
Economists have broadly listed four post-poll scenarios and their possible repercussions on the Indian market. The four scenarios are -- Modi-led NDA government with two-three allies; Modi-led NDA government with five-six allies; other leader led-NDA government with 8-10 allies or a Third Front government supported by Congress.
Some of the recent surveys suggest the BJP-led National Democratic Alliance coalition has solidified its lead and is now poised to emerge as the largest coalition. According to a BofA-ML report, the BJP-led NDA has a "fighting chance in around 425 of the 543 seats", but it did not predict a final tally
BofA-ML, in a separate report, further said that in the upcoming general elections the key states that are likely to shape the next government are UP, Maharashtra, Andhra Pradesh, Bihar, and Tamil Nadu as these are potential swing states where there is a multi-cornered fight.
While national issues will have a big impact on the voting pattern, local level alliances would also matter and even a small swing of votes could materially change the seat tally of the parties, they said.
"Among the key states to watch out for are UP, Andhra Pradesh, Maharashtra, Bihar, and Tamil Nadu. These states are potential swing states where there is a multi-cornered fight," Bank of America Merrill Lynch analysts led by Jyotivardhan Jaipuria and Indranil Sen Gupta said in a research note.
According to Morgan Stanley, the elections will produce a stable government, which can then take up some of these reforms in a steady fashion.
More than 800 million people are expected to cast their vote this time. Elections are being held in nine phases between April 7 and May 12 and the results would be announced on May 16.