The World Is About To Witness The Biggest Election In History

India's general elections are underway and expected to wrap up on May 12.

With some 814 million Indians eligible to vote, Morgan Stanley's Ridham Desai and his research team have said "the world is about to witness the biggest election in history."

The elections are also slated to be the most expensive in Indian history at Rs. 300 billion (about $5 billion), according to Bloomberg.

The elections will have major implications not just on policy but also on the nation's growth which has languished in recent years.

"This could herald a sea change for India's economy, which has struggled with stagflationary-type conditions over the past few years," writes Desai. "We think the incoming government will have to de-anchor inflation, raise capital productivity, improve the investment climate and de-lever private balance sheets to engineer a new growth cycle."

Desai highlights five key reforms he expects the new government to push through:

1. "Initiate policy changes to manage wage growth in line with productivity:" "We believe that persistent high nominal wage growth even as GDP growth and job creation has collapsed can only be explained by the intervention of policy makers in the labour market."
2. "Cut fiscal deficit:" "We believe that in the first stage there is a need to reduce expenditure - to the tune of about 1% of GDP. In the second stage, as growth recovers and tax revenues to GDP improves, expenditure growth will need to be maintained at a lower level to ensure that the national fiscal deficit is brought down from the current level of close to 8% of GDP to about 5%."
3. "Improve the business environment:" "We believe that policy makers should address this comprehensively by providing a consistent policy framework in key infrastructure and industrial sectors, work on streamlining the approval process for investment projects, facilitate the rehabilitation of corporate balance sheets, provide funds for recapitalizing SOE banks to unclog their balance sheets and promote reforms to encourage more workers to move into organized forms of labour market activity."
4. "Rethink urbanization policy:" "We believe that policy makers will need to focus on creating physical infrastructure in cities and ensuring better delivery of public services to citizens."
5. "Address structural rigidities in the economy to unleash growth potential, particularly in energy and mining:" "Several supply bottlenecks, including the approval process for environment and land acquisition, and the lack of rail linkages have adversely affected the energy and mining sectors and have weighed on India's growth potential."

So far, surveys suggest that the incumbent party, the Congress party will fall and see a BJP (Bharatiya Janata Party) and NDA (National Democratic Alliance) coalition winning 230-240 seats and headed by Narendra Modi.

Modi is lauded for having driven growth in the Indian state of Gujrat. But his record is tainted with many pointing fingers at the BJP leader who failed to do anything about the bloody Hindu-Muslim riots in Gujrat in 2002, where 1,000 people were killed, though some put the figure much higher. Modi was chief minister of Gujrat at the time.

The election results are expected on May 16.