India is heading for a colossal economic boom: Profit Hunter readers could be set for a massive pay-off

The Indian government has just survived a no-confidence vote in parliament.

The move was brought by the left-wing Marxist parties and the right-wing Hindu nationalists.

We don’t normally report on third world politics here at PH. But this is BIG news.

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And it could trigger an unprecedented economic boom in India.

Great news for two companies on the Profit Hunter watch list!

This is what investors have been waiting for

India’s reformist government has been on the edge of its seat for most of this year. In 2006, it signed a nuclear co-operation agreement with the U.S. The deal will give India access to the latest civilian nuclear technology.

This is crucial to solving India’s energy crisis. And it’s vital for the countries long-term economic development.

Right now, power shortages shave 2% of India’s economic growth every year. Expanding nuclear power could boost India’s annual growth rate to 10% per year. So the deal makes perfect sense.

But the government doesn’t have a majority in parliament. It relied on the support of left-wing parties to stay in power.

But the nuclear deal upset the government’s Communist party allies. The Communists argue that the terms of the treaty will curb India’s independent foreign policy. And the right-wing Hindu nationalist BJP party opportunistically piled on board to force an early election.

The threat of political instability hasn’t done India’s stock market any good. It was down by 31% for the year yesterday. That put it on P/E ratio of just 14.

But the government survived by cobbling together a new coalition. And its victory sent India’s benchmark Sensex index soaring almost 6% today.

This is much bigger than a nuclear deal

But there is a lot more than nuclear energy at stake here. The Communist parties have also blocked a whole range of economic reforms.

As finance minister from 1991 to 1996, Manmohan Singh kicked-off the economic reforms that set India on the path of high-speed growth.

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As Prime Minister since 2004 he has presided over a period of record economic growth. And that’s despite his boldest reform proposals being blocked by his left-wing allies.

India could be heading for a colossal economic boom

But now the Communists aren’t there to hold him back anymore. That could give a shot in the arm to the country’s economic reform programme.

The government wants to revive its privatisation programme, pensions reforms and raise limits on foreign ownership in key industries. This should set off a new wave of foreign investment in the country.

India’s economy grew by almost 9 percent in each of the past four years. The nuclear deal and revived economic reforms could boost that. The government is aiming for 10% growth annually.

That would trigger the sort of economic development that we have seen in China over the last decade.

We’ve been watching two Indian companies very closely here at Profit Hunter. Both of them are direct plays on India’s economic growth. One of them is now beginning to look like an extremely strong investment opportunity.

I’m going to be updating my readers on this opportunity shortly. If you would like to receive that update, as well as information, on other investment opportunities from around the world, please click here

Regards,

Manraaj Singh
Editor
Profit Hunter

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