US-India spat: Watch it, don’t fret it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A diplomatic spat between the US and India, the world’s two most populous democracies, is certainty something to watch but not fret about for now, analysts say.

The arrest and strip-search of an Indian diplomat in New York last month has soured US- Indian relations, prompting the postponement of two India trips by senior US officials and another by a US business delegation.

“US relations are one of the closest economic ties India has, so current developments are worth watching,” said Rahul Bajoria, a regional economist at Barclays. “In the IT sector and the goods sector, there is significant trade surplus that India generates from US firms, which needs to be kept in mind when considering any fallout from this incident.”

On Thursday, Indian envoy Devyani Khobragade was asked to leave the US as part of a deal in which she was granted diplomatic immunity from charges of visa fraud and lying about how much she paid her housekeeper.

The incident has left a bitter taste. Angered by the treatment of Khobragade, India has curtailed the privileges of US diplomats in India and this week ordered the US embassy to close a club used by expatriate Americans in New Delhi.

There has also been outrage at the treatment of Khobragade, with the Indian media describing the incident as the worst crisis since Asia’s third largest economy carried out a nuclear test in 1998.

“This is an election year in India, with the Hindu nationalist BJP [Bharatiya Janata Party] party seeking to overturn the Congress Party. So there might be a political basis for some of the rhetoric in India surrounding this issue,” said Clem Miller, investment strategist with Wilmington Trust Investment Advisors.

(Read more: India’s hottest startup is a political party )

The US needs a friendly India as it pulls U.S. troops out of Afghanistan and seeks to balance China’s power in Asia, analysts say. In 2010, US President Barack Obama described U.S.-India ties as a “defining partnership” for the 21st century.

Millions of Indians live in the US meanwhile and economic ties between the two countries are strong.

Bilateral trade between India and the US is estimated to be worth roughly $100 billion a year.

According to the Indian government, exports to the US between January and October 2013 were worth almost $36 billion, a rise of 4.11 percent over the same period a year earlier.

Miller said he did not expect the diplomatic row to have a pronounced impact on US-Indian trade relations.

“At the geopolitical level, the US and India see each other as potential counterweights to a rising China, especially in the Indian Ocean region,” said Miller.

“With respect to trade and economic interests, American businesses and investors are very interested in participating in what they expect to be rapid Indian economic growth over the next decade or two,” he added.

Copyright 2011 cnbc.com

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India’s economy is out of the woods: ICICI CEO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After India’s growth rate halved over the past few years, the worst is finally over, says Chanda Kochhar, chief executive officer of ICICI Bank — the country’s largest private sector bank.

“The worst is over…export-oriented companies are doing better because of the adjustment in the rupee. We brought a lot of control on our current account deficit (and) the government is quite focused on [controlling] the fiscal deficit,” Kochhar said on CNBC’s Managing Asia.

“All of those things have meant that we’ve brought the slide down to an end,” she added.

However, the recovery in Asia’s third largest economy will be slow and gradual, says Kochhar, and will largely depend on a revival in investments.

(Read more: US-India spat: Watch it, don’t fret it )

India’s slowdown has posed grave challenges for the country’s banking sector, which has seen a spike in nonperforming assets as companies struggle to repay loans.

Bad debt at Indian banks rose to 4.2 percent of total loans at the end of September, nearly doubling since 2009, according to data from the central bank.

Kochhar says while she is “confident” about ICICI’s asset quality, the bank’s corporate loan portfolio is being actively monitored.

“If you look at the consumer side of the portfolio, which is mortgages, car loans, there is actually no pressure at all. But when you look at the corporate side, I think the stress is different across projects,” she said.

“Power projects are differently placed to road projects. There’s difference stress across different companies across different groups based on their leverage levels. So it’s a time of heightened monitoring and control,” she added.

Despite India’s sluggish economy, Kochhar expects the country’s banking sector will continue to grow at double-digit rates.

“My belief is India’s banking industry will continue to grow at two and a half times the GDP [gross domestic product] growth rate,” she said. India’s economy is expected to register a growth rate of less than 5 percent in the year to March 2014, well below the near double-digit growth seen in 2010.

For ICICI, this expansion will come from increased focus on the bank’s secured consumer lending business including home and car loans.

“This is prudent approach because the credit experience around these products has been very stable even during the lowest of economic cycles,” she said.

Copyright 2011 cnbc.com

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Asia currencies in 2014: Survival of the fittest

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Weakness in Asian currencies this year amid an unwinding of US monetary stimulus is likely to be broad and not just confined to countries with large-current account deficits, currency strategists say.

US economic indicators over the past week suggest the world’s biggest economy is in better shape than financial markets had anticipated. That keeps the spotlight on the unwinding of the Federal Reserve’s massive stimulus program that starts this month.

(Read more: Jobless claims next up before employment report)

Trade early in 2014 suggests that it may not be just the Indonesian rupiah and Indian rupee – currencies backed by countries with big current-account deficits – that are vulnerable to Fed tapering jitters.

The Singapore dollar on Thursday hit its weakest level in four months at about 1.2738 per US dollar. Earlier this week, the Philippine peso sank to its lowest level in over three years at about 44.85 per dollar, while the Malaysian ringgit last week hit a four-month low.

The rupiah meanwhile has been holding close to a five-year low hit last month at about 12,278 per dollar, while the Indian rupee has been stable in recent weeks, hovering around 62 to its US counterpart. It has recovered about 10 percent from record lows hit in August.

 “Dollar/peso is on the cusp of going to new highs, so is dollar/Malaysia, dollar/Sing. Malaysia, [and] the Philippines, have current account surpluses, this is not a current-account deficit issue,” Richard Yetsenga, head of global markets research at ANZ bank in Sydney, told CNBC.

(Read more: Emerging vs developed? What if it’s not a competition)

“This issue is about who is vulnerable to higher interest rates and in the emerging [market] space that pretty much means everybody,” he added.

Survival

The survival of the fittest would be the key theme for the year, HSBC said in its 2014 Asia currency outlook published on Wednesday.

“Many Asian currencies will be exposed to periods of higher volatility in 2014. This means that monitoring the FX policy reaction for currencies facing downward pressure will become even more important,” HSBC currency strategists said.

They expect the Chinese yuan, South Korean won and Taiwan dollar to fare better than their Asian peers, with the rupee, rupiah, Thai baht and Malaysian ringgit likely to be the underperformers, while the Singapore dollar and Philippine peso would lag North Asian currencies.

HSBC has a year-end forecast for the ringgit at 3.33 to the dollar, implying a fall of about 2 percent from current levels. It forecasts dollar/rupiah at around 12,500 by year-end, suggesting a 2 percent fall for the rupiah.

Indeed, signs of improvements and efforts to tackle current-account deficits in Indonesia and India have helped lend some support to local currencies.

(Read more: Goldman Sachs: Cut your emerging markets exposure)

While that means the current-account deficit issue may be less prominent than it was last year when emerging markets were gripped by Fed tapering fears, deficit concerns have not disappeared entirely.

“The experience has been that a rise in the 10-year [US Treasury] yield has been accompanied with a weakening of Asian currencies and I think the rupiah is going to be at the front of the pack largely because it [Indonesia] runs a significant current account short-fall of over 3 percent to GDP [gross domestic product],” Lim Say Boon, chief investment officer at DBS Group Wealth Management.

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Why Facebook isn’t a good platform for recruiters

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With an explosion in the use of social media in recent years, it`s little wonder that some employers have turned to Facebook and Twitter to learn more about potential job applicants.

Yet, the results of a new academic study suggest that social media may not be a great indicator of an employee`s performance.

Read more: The most stressful jobs for 2014

In a report published in the Journal of Management last month, researchers from the US`s Florida State University, Old Dominion University, Clemson University and Accenture said that companies should be “very cautious” about using information found on social media to assess candidates.

The researchers asked 86 recruiters to assess the Facebook profiles of 416 undergraduate and graduate students from a large university in the southeastern US. They followed up with the applicants a year later and asked their new supervisors to review their performance.

Their findings: recruiters` assessment of information on Facebook was unrelated to a supervisor`s ratings of job performance, turnover intentions and actual turnover. Also, the Facebook ratings did not contribute to predicting these factors beyond other more traditional indicators, while there was some evidence in the Facebook ratings that tended to favor female and White applicants.

“In sum, although SM [social media] platforms such as Facebook and Twitter may contain some potentially job-relevant information, identifying and accurately rating this information could be quite difficult,” the research said.

“Indeed, such platforms are not designed to elicit job-relevant information and, in fact, contain various types of job-irrelevant information that could influence judgments about applicants.”

Social recruiting

Still, there is some evidence that an increasing number of employers are using social media when assessing job applicants. Part of that may be associated with the rise of LinkedIn as a networking site for professionals.

Read more: LinkedIn earnings beat, but outlook falls short

An online survey by recruiting platform Jobvite last year found that 94 percent of recruiters used social networks or social media to support recruitment efforts in 2013, up from 89 percent in 2011 and 78 percent in 2008.

Of the top social networks for recruiting, 94 percent of recruiters said they used LinkedIn, followed by 65 percent for Facebook and 55 percent for Twitter.

Research firm Research and Markets said in a global recruitment report last month that job applicants are also increasingly using social media to network and identify employment opportunities.

“What we`ve seen is an increase in background checks. So a third party is hired to check everything – go through qualifications, check previous work history, check activities,” said Andrew Tomich, executive general manager for recruitment firm Hudson Singapore, in response to a question about whether there was greater use of social media by employers to assess potential candidates.

“I think in some situations, organizations are using social media to assess someone. It`s a big thing if you are in a public facing role,” he added.

Read more: In Singapore? Odds are, you`re looking for a new job

Watch what you say

Indeed, what somebody says on social media can have ramifications for their current or future employment.

Justine Sacco was sacked as communications director of New-York based internet firm InterActive Corp last month after sending a tweet before departing on a holiday to South Africa that linked AIDS to race.

Speaking about privacy at The New York Times` Global Forum Asia last year, Meg Whitman, chief executive of computer giant Hewlett-Packard, had this to say on the subject:

“There has to be some personal responsibility here. When you put things on the internet, on Facebook, on Twitter on LinkedIn, you have to assume that it`s almost like standing outside your house with a sign – handing out your information – you have to be really thoughtful about what you put online.”

“Companies have a real responsibility to take that data that is near and dear to you, and handle it in a really thoughtful, deliberate way, and use all resources to maintain that privacy,” she added.

– Additional reporting by Ansuya Harjani

– Reporting by Dhara Ranasinghe; Follow her on Twitter at @DharaCNBC

Copyright 2011 cnbc.com

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Emerging vs developed? What if it’s not a competition?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Selling emerging markets and buying into developed ones has been the consensus call since the US Federal Reserve broached the idea it would taper its asset purchases, but what if the two spheres aren’t really in opposition?

“The general thesis they have – which most people have – is that there’s going to be a strong recovery in the developed markets and as a consequence, particularly because of the Fed tapering action, the emerging markets will tank,” said Piyush Gupta, chief executive of DBS Group, at a presentation to private banking clients.

“I agree with half of the thesis. I tend to believe that the recovery in the developed markets will happen and continue to happen this year,” he said. “But I have to say I am not in the camp that says this is a zero-sum game and if the developed markets do well that necessarily means emerging markets are going to go down.”

(Read more: Goldman: Cut your emerging markets exposure by a third)

For much of 2013, markets have behaved as if they believed that was the case, with shares in the US, Japan and Europe climbing, while emerging markets convulsed.

But Gupta doesn’t expect that will continue.

“When there is a degree of confidence particularly in the US and in the large US investor community, that confidence actually spills over favorably to the rest of the world as opposed to unfavorably,” he said.

Additionally, within Asia, “the general view is that as rates go up, dollars and money will leave Asia, credit will start getting tight and as credit starts getting tight, Asia will have a bit of a problem,” he noted.

But he added, “Asia’s had five years of growth with zero demand from the West. Surely that growth comes from somewhere? It comes from domestic consumption and domestic demand.” He expects the “demographic dividend” from Asia’s younger population as well as urbanization and infrastructure development will continue to drive significant demand in the region.

(Read more: Emerging markets get no love even as US bats up record highs)

Gupta also has some doubts about tapering causing further fund outflows from the region.

“Of all the QE3 [quantitative easing] money that was put out, the interesting things is that 85 percent of the money went back into the Federal Reserve bank. The corporates and the banks in the US are sitting on piles of money because they didn’t put the money to work,” he said.

“When they start feeling more confident and you want to start using some of the money, where are you going to use it,” he asked. “Do you think a lot of the global investment corporates are going to invest massively in the US and Europe and not allocate capital to Asia? It sounds like a far-fetched theory to me.”

(Read more: Some fund managers turn positive on emerging markets)

Others are also resisting the urge for blanket pessimism on emerging markets.

“Whilst emerging markets have been a disappointing investment over the last couple of years, I think people overlook the fact that the emerging world is still growing faster than the developed world,” said Richard Titherington, chief investment officer for emerging markets at JPMorgan Asset Management, in a panel discussion at the DBS event. “People are very excited about Japan growing at 1 percent and they’re very pessimistic about China growing at 7 percent,” he noted.

(Read more: Next emerging market sell-off may be time to pounce)

“The extreme monetary policies the US, Europe and most recently Japan have been a headwind for the emerging world because we don’t need those kind of policies,” Titherington said.

But while he’s more optimistic on the economic outlook than much of the consensus, he isn’t certain that equities in the emerging markets will outperform their developed peers.

“If you get another 20 or 30 percent from US equities, are emerging market equities going to do better than that? Tricky. But are emerging markets going to go up themselves? Yes, I think they will,” he said. “Generally, if you buy what’s cheap, it’ll come back and mean revert in your favor.”

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

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Will gold be 2014’s comeback kid?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold is getting shunned after its miserable 2013 performance, but some analysts are starting to see glimmers of a recovery in the coming year.

It`s a bold call for a nearly universally hated asset. Gold lost about 28 percent last year, its worst decline in more than three decades.

(Read more: It`s past time to short gold: Dennis Gartman )

“Gold has come down because everybody piled in on it for 12 years in a row and (I`m) sure some people used leverage and it was due for a very severe correction,” said Axel Merk, chief investment officer at Merk Investments, which has around USD 450 million under management.

But he added, “I like gold medium term because there`s too much debt in the world,” citing expectations that despite the Federal Reserve`s move to begin tapering its asset purchases, monetary policy is set to remain easy. Concerns about inflation generally push gold prices higher.

“We will have heavy-handed policy making throughout the world. We will continue to have negative real interest rates. We cannot afford positive real interest rates,” he told CNBC. “With record low interest rates, you cannot price risks; you cannot go back to a normal environment.”

In addition, while a strong US dollar (New York Board of Trade (Futures): =USD) usually weighs on gold, the greenback hasn`t been rising across the board, he noted, with the dollar actually falling against the euro.

“The dollar is up versus the yen (Exchange: JPYUSD=) where things are worse,” he noted.

(Read more: The case for ditching stocks and buying gold in 2014 )

He expects gold can rise to around $1,350 an ounce from its current level around $1,228.

Merk isn`t alone in expecting a gold recovery.

“We believe gold buyers will return,” Coutts said in a note.

“The fundamental reasons for holding gold have not changed,” it said, citing the use of gold to hedge geopolitical risks. “While some systematic risks in the global economy, such as the meltdown of the euro zone, have been partly allayed, the developed world is still carrying a burden of debt that remains largely unaddressed,” it said.

Coutts expects Indian curbs on gold imports will eventually be eliminated, while Chinese retail demand remains upbeat and signs of a pickup in jewelry demand in Western economies are emerging.

“We see current prices as an attractive entry point given our view that the balance of risks now points to the upside,” it said.

Others also see reasons to at least turn less negative on the metal.

“We do think the bulk of that (exchange-traded-fund) selling is now behind us and we will only perhaps see moderation in selling, if any selling at all,” said David Lennox, resources analyst at independent research house Fat Prophets.

(Read more: I wouldn`t buy gold with my worst enemy`s cash: Strategist )

“When you have a look at what the industry itself is doing, it is now actually adjusting to the lower gold price environment. We`ve seen primary production starting to moderate. We`ve seen secondary production, through recycling, actually collapsing through the latter part of 2013. And we saw a good increase in jewelry demand and also in industrial demand,” Lennox told CNBC. “We do think that`s going to lend quite strong support to the gold price,” he said, adding he expects the price to rally toward the latter part of the year.

To be sure, a positive view on gold isn`t the consensus.

“If the dollar is moving up, which is our case, real interest rates are moving up, the world healing, normalizing, that`s hardly an environment for gold to do well,” said Bob Doll, chief equity strategist at Nuveen Asset Management, which has around $115 billion under management.

(Read more: Contrarian view: Why gold will recover in 2014 )

“(When) people bought gold, they were concerned about inflation – not a problem at least that I can see – and that the system might fall apart. Neither of those things happened so it`s no surprise that gold finally had a tumble. I don`t think we`ve seen the lows yet,” he told CNBC.

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Copyright 2011 cnbc.com

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10% stock correction coming, gold going down: Nuveen AMC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nuveen’s Bob Doll sees a 10 percent stock correction amid a pretty good but volatile year for stocks, and he expects gold and other commodities to continue to fall.

Doll, chief equity strategist at Nuveen Asset Management, also sees the economy growing at a 3 percent pace and the 10-year Treasury yield topping out at about 3.5 percent in 2014, while the Federal Reserve continues to hold short-term rates near zero. It should become clear by the end of the year that inflation has bottomed, but it will not be a factor to help gold out of its slump in 2014.

“In our opinion, the mystery is not that gold finally came down—the mystery is that it took so long. The preoccupation with gold was originally related to a concern about the viability of the financial system, and the concern about inflation with so much money being ‘thrown’ at this system,” he said in his forecast. Gold lost about 28 percent last year, its worst decline in more than three decades.

 “Now the added headwinds of improving global growth and a reduction in systemic threats, some rise in real interest rates, and likely dollar improvement, all put further pressure on gold’s allure. In addition, the lack of strong global economic growth and abundant supply for many commodities likely argues for trendless, but volatile (as usual) commodity prices,” he noted.

As for stocks, he expects the stock market to continue to perform well, and cyclicals should outperform defensive stocks, while gains should be “less ebullient” and the market more volatile. Market gains will depend more on earnings growth, rather than on multiple expansion.

(Read More: Wien sees 10 percent correction)

“While expectations of high single-digit or low double-digit percentage gains are not unreasonable, we also think a noticeable pullback some time during the year is likely to be caused by overbought and deteriorating technical conditions. We would use pullbacks as buying opportunities as most fundamentals continue to improve,” Doll said in his forecast.

After the S&P 500’s more than 29 percent increase in 2013, Doll expects active managers to outperform the index funds in 2014.

Doll expects the dollar to appreciate, while U.S. energy and manufacturing trends continue to improve.

He sees companies continuing to drive gains with double-digit increases in dividends, stock buybacks and merger activity. Capital expenditures should also increase at a double-digit pace, due in part to delayed investment.

“Dividends and buy-backs have been increasing in recent years, but we expect the largesse to spread to businesses reinvestment (capex) and buying the company ‘down the street.’ Pent-up demand and aging of plant, equipment and technology argue for increases in those key areas,” he said in the forecast.

Municipal bonds should also outperform other fixed income, after massive outflows in 2014. Even though their performance should be mixed, pricing has become more attractive.

“The visibility of Detroit’s and Puerto Rico’s difficulties has created an interesting opportunity for municipal bond investors. We believe the fall of 2013 was a turning point for state and local governments as politicians and unions have begun to agree to some reduced pension benefits,” he noted.

Washington will fall more into the background for markets in 2014, and will be more “benign, and more likely constructive” after the turbulence of 2013.

“The recently negotiated ‘small ball’ deal between Democrat Patty Murray and Republican Paul Ryan will likely reduce the negative focus on fiscal policy. The November mid-term elections will soon dominate Washington with the likelihood of Republicans slightly increasing their lead in the House of Representatives, and increasing representation, but failing to control the Senate,” he noted.

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Apple, Amazon downgraded ‘on moral and ethical grounds’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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One analyst blacklisted several companies on Monday, citing a reason not often (or possibly ever) heard on Wall Street—moral and ethical grounds.

In the report, Ronnie Moas, Standpoint Research’s founder and director of research, downgraded Apple stock from a “hold” to a “sell,” reiterated a “sell” recommendation for Amazon.com shares and initiated Philip Morris stock with a “sell” rating.

After holding in his feelings for “too long,” Moas wrote that he couldn’t sleep despite taking his nightly sleeping pill. At 1 a.m., he reached his boiling point and felt compelled to speak his mind.

Moas’ Standpoint bio page states he began his career as an analyst and market strategist at Herzog Heine Geduld, which was bought by Merrill Lynch in 2002, before leaving to start his own firm in 2000. Before this, he served for three years in the Israeli army and worked in concert productions.

“For Apple Computers to pay their workers USD 2 an hour while they have USD 150 billion in the bank is nothing short of obscene. I heard all of the arguments in their defense and they make no sense to me,” wrote Moas in the note.

Thomson Reuters StarMine, which tracks and ranks analysts’ performance, has no record of Moas’ recommendations on Apple. According to published reports, he downgraded the stock in August from “buy” on valuation concerns.

While Moas said there are dozens (if not hundreds) of companies he would like to blacklist, he singled out just three in the report, noting that he planned to speak his mind even if it resulted in the destruction of his business.

“Philip Morris has the black lungs and blood of 500,000,000 people on their hands,” he wrote, acknowledging that his email was controversial and would upset many.

“I recently read something about Amazon and how much pressure is on their employees … and at the same time Jeff Bezos with his obscene net worth of USD 27 billion was on his yacht in the Galapagos Islands. USD 27 billion and this man is not treating his workers fairly? It boggles the mind,” Moas wrote.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nissan gives the London black cab a lick of fresh paint

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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London is well-known for its iconic vehicles. Its red double-decker buses and black taxis are as a much a symbol of London as Buckingham Palace and Big Ben.

So Japanese automaker Nissan was very mindful of tradition when it came to designing its new black cab for London, unveiled Monday.

The Nissan NV200 may retain the color and bulky presence of the famous London Hackney Carriage, but there are notable changes: round headlamps, an LED light to improve visibility of the traditional taxi sign, and a 1.6 litre petrol-engine replacing the previous model’s diesel.

(Read more: Would you pay $75 to sleep inside a London cab?)

Nissan first launched the NV200 in August 2012, but since then it has modified the vehicle after feedback from the London Mayor’s office, Transport for London (TFL) and other organizations. Nissan said that they re-modelled the front grille of the original NV200 to give it a traditional back cab “face.”

The new taxi, which will be built in Barcelona, will be launched in December 2014 and Nissan will introduce a zero emission electric version of the taxi in 2015. Nissan’s London cab is part of the automaker’s global taxi program which includes the cities of New York, Barcelona and Tokyo.

According to TFL, there are currently 25,597 licensed cab drivers in the capital and 22,708 licensed vehicles. The London Taxi Company currently produces the most number of vehicles in service, with its TX1, TX2 and TX4 models comprising just over 20,000 of all London black cabs.

(Read more: Black Christmas as London runs out of cabs)

 While the new cab may look rather different to the traditional black cab Londoners and tourists are familiar with, Design Excellence Manager at Nissan Design Europe (NDE) Darryl Scriven was at pains to stress how much the company worked to ensure their vehicle looked the part.

“The main challenges were concerned with making sure customers can easily recognise it as a taxi,” he said in a statement.

“Being in London, we were able to go out and talk to cabbies about what was important to them as well as look at the vehicle from a customer’s viewpoint. It’s unusual for us to be able to work on something as bespoke as this, specifically for one location in the world and we are very proud to have been asked to do so.”

(Read more: Yo! Finally, smartphone apps that call a taxi)

—By CNBC’s Kiran Moodley. Follow him on Twitter @kirancmoodley

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s hottest startup is a political party

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The new kid on India’s political block, the Aam Aadmi or Common Man Party, has stunned the nation with its meteoric rise since its inception just over a year ago, but the question remains: does it have enough momentum to win big in the general elections?

Operating on a shoe-string budget, the anti-graft party, led by former tax official Arvind Kejriwal, has managed to capture the hearts and minds of disenchanted Indians looking to eliminate the rampant corruption that has plagued the country for decades.

(Read more: Why India’s state elections matter)

“The Indian electorate has become increasingly dissatisfied with the performance of the ruling United Progressive Alliance [UPA] coalition government led by the Congress Party, reflecting a broad range of issues, including the extreme levels of corruption in India,” Rajiv Biswas, Asia chief economist at IHS told CNBC.

“Unlike the Congress Party or Bharatiya Janata Party [BJP], the Aam Aadmi Party [AAP] is a new party founded in 2012 by its charismatic leader Arvind Kejriwal, with a strong focus on fighting corruption and improving the efficiency of Indian government,” he added.

India, the world’s largest democracy, was ranked 94 out of 177 countries in the 2013 Corruption Perceptions Index published by Transparency International.

The electorate’s yearning for change is evident in the party’s growing support base, which is expanding rapidly both domestically and abroad.

(Read more: Indian market euphoria could end in disappointment)

For instance, V Balakrishnan, who recently stepped down as a board member of I.T. services giant Infosys, announced last week that he has joined the AAP.

Meanwhile, thousands of non-resident Indians (NRIs) across the world are coming together to generate awareness and raise funds for the party.

In the eight months leading up to December’s Delhi state election, the party raised around 200 million rupees (USD 3.2 million) globally via online donations, with over 65 million rupees coming from outside India, according to Saket Tandon of the AAP Singapore Forum.

Tandon, who dedicates his evenings and weekends to developing social media campaigns and fund raising initiatives for the party said, “The Aam Aadmi Party has given Indians across the globe a common interest, a common platform. We are all fed up with the political scenario. This gives us hope that things can change,” he said.

State vs general elections

The party made a speculator debut in the recent Delhi state elections, winning 28 out of the 70 seats – dwarfing the ruling Congress party’s 8 seats, and almost matching the opposition BJP’s 31 seats.

In late December, Kejriwal formed a government with the support of the Congress which currently leads the national coalition. At age 45, he is the Delhi’s youngest chief minister.

(Read more: Indian Prime Minister’s mixed legacy)

However, the question remains whether the anti-corruption crusader can replicate his success outside of Delhi in the country’s general elections due to be held by May 2014.

According to Jan Zalewski, South Asia analyst at global risk consultancy Control Risks, whether the AAP can be a real national alternative to Congress or BJP will likely depend on how the party is able to deliver on extremely high expectations and how it develops and diversifies its political vision.

“For now, the AAP is still in its infancy, with fledgling party structures and a still-weak political vision beyond its core anti-corruption focus,” Zalewski said.

“It is thus likely to be able to tap into – and thus to a certain extent dilute – the two main parties’ share of votes in many states where it decides to contest elections. In the short term, this could increase the fragmentation of Indian politics,” he added.

—By CNBC’s Ansuya Harjani. Follow her on Twitter @Ansuya_H

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow