CLSA’s Chief Strategist Christopher Wood this past week drew a comparison among Prime Minister Narendra Modi and Margaret Thatcher, saying Modi’s current election challenge has an uncanny similarity with what the former British Prime Minister faced in 1983 to win a second term.
In his weekly note ‘Greed and Fear’ report, the Hong Kong-based strategist said just like Thatcher, the Indian Prime Minister is committed to structural reforms and indeed has an agenda to change the country and the base case for Indian market in the current election would be a win for Modi, with a degraded majority.
Wood stated Modi would be getting some help from the tailwind provided by his assertive stance on the Pakistan issue.
“Modi’s most apt historical comparison would be Margaret Thatcher who, towards the end of her first term, looked far from sure of being re-elected because of the unpopularity of her tough macro policies which were characterized by left-wing opponents as ‘the cuts’. It took the following wind of the Falklands War to give Thatcher a decent majority for her second term in 1983, which then allowed the late and great former British Prime Minister to consolidate and build on her reforms,” Wood penned.
The CLSA analyst said ‘Greed & Fear’ remains firmly of the view that Modi has undertaken a number of structural reforms which, like all such reforms, are painful for vested interests. “This pain has been further exacerbated by the blowup in the non-bank financial sector since the IL&FS default late last August, the fallout from which continues,” he stated.
“Fundamentally, Margaret Thatcher had an agenda to basically change the UK, which she actually succeeded in doing. But she was able to do that partly because she had three times in government. Towards the end of her first term in government, it was far from clear that Margaret Thatcher was going to be re-elected, because she was implementing some painful structural reforms and that I think is where there is a bit of analogy with the situation here,” Wood later described.
He indirectly favored a second term for Modi, saying a minimum of 10 years in power is required to deliver on such hopes.