Prime minister Manmohan Singh won a vote of confidence in India's parliament yesterday with a comfortable margin. The opposition had demanded the premier's resignation after three MPs alleged they had been bribed to abstain, but the government won the vote 275 to 256, ensuring the immediate survival of the ruling coalition and of a civilian nuclear deal with the US.
Now the government can move ahead with the deal, which would draw India closer to the West and allow it access to foreign civilian nuclear fuel and technology, despite its failure to sign the Nuclear Non-Proliferation Treaty and its conducting of nuclear tests in 1974 and 1998. According to an Indian business lobby group, the deal could unlock USD40bn in investment over the next 15 years, as India seeks new energy sources to tap its booming, trillion-dollar economy.
It would be an understatement to say that hedge funds' interest in India will be amplified with the establishment closer ties to the West. But more importantly, the focus on alternative energy, the demand in emerging markets such as India and the high return on investment that could be generated from nuclear power investment will undoubtedly catch the notice of many hedge funds.
India is already in demand. The son of notorious property developer Donald Trump is reported to be planning a USD1bn fund to acquire luxury property in India. The country's finance minister P. Chidambaram said yesterday: 'The government has charted out a new path which will end India's nuclear isolation and will pave the way for India becoming an economic superpower.' Far-sighted hedge fund managers will no doubt share his view.