The world's future depends on how this turns out
The traditional Indian response to a US election has been to side with candidates who prefer freer trade (Republicans mostly) and those who tend to be a lot more strategic in their approach to an Indo-US partnership (which Democrat President would give India the kind of nuclear deal George Bush did?). Increasingly, however, with a greater Indian stake in globalisation, the metric by which to judge a red-state-blue-state contest is to see which candidate will be better for the US, for that’s where India’s future lies. A Democrat Obama may be more certain to try and restrict offshoring to India than a Republican Romney, but if the US economy recovers to full potential under Obama, there’s a lot more money to be made by India.
Obama’s track record, going by that yardstick, is certainly more promising. From an economy that was losing 800,000 jobs a month when he assumed office and an economy that was contracting 9% on an annualised basis back then, the US has come a long way with the economy growing 2% in Q3 2012. While Obama’s $800 billion stimulus certainly prevented the Greater Depression from taking place, the Dodd-Frank legislation ensured US banks went through a re-making process that has left them far stronger than in 2008 when, after Lehman, many looked in danger of going the dominos way. But while Obamacare has done a lot to bring in 40 million people under health insurance, it remains true the President has not addressed Medicare’s huge and galloping costs. Obama’s answers on fiscal correction look equally unconvincing and the fact that he spent so much time attacking Romney’s corporate background only suggest industry bashing comes naturally to the Obamaites.
On the other hand, while you have the obviously successful businessman Romney, his tax proposals are even vaguer—tax cuts along with a huge jump in defence spending adds $7 trillion to the deficit in 10 years. While Romney has pledged to eliminate tax loopholes, he hasn’t specified which and that’s easier said than done. Romney’s promise to declare China a currency manipulator the day he assumes office may sound music to jingoistic Indian ears, but let’s face it, putting anti-dumping duties on Chinese imports will benefit a Vietnam or a Bangladesh far more than it will India given how little we’ve done for textile industries, for instance. Of far greater importance, especially for the medium-term, is the leadership change—a week after the next US President is declared—across India’s border. How the new Chinese leadership tackles China’s slowdown may have an even more profound impact on the world, and India’s, growth prospects.