That is a far cry from a year ago, when onion prices were high and BJP's popularity was low. Foreign investors were wary too: Led by Prime Minister Atal Bihari Vajpayee, the party had just tested nuclear weapons, triggering US-led economic sanctions, and it unveiled a budget that was more protectionist than reformist. Foreign capital fled Bombay's stock markets, and some MNCs pruned their expatriate staffs.

Today, with inflation at a 20-year low, thanks to good monsoon, and nationalist ideologues largely sidelined, BJP has gained momentum. Part of the appeal is stability. This election is India's third in as many years, and polls suggest that BJP was best placed to form a government that could last a five-year term. The hawkish party also scored points with voters for its handling of anundeclared war with Pakistan this summer in disputed Kashmir.

Economic self-reliance

Still, foreign business's confidence in BJP is surprising given that the party doctrine once emphasized swadeshi. "Contrary to investor perceptions of the BJP last year, swadeshi is off the map," says Vikram Goyal, regional economist for Morgan Stanley Dean Witter in Hong Kong. "It's not a concern." Now when he visits foreign companies and fund managers, he says, "their main concern is reducing India's fiscal deficit, and they believe that this is an area, where BJP is strong."

BJP's main opponent, the Congress Party, launched market-oriented reforms in 1991 that began dismantling the socialist economy and ushered in foreign investment. But those radical changes were forced by a balance-of-payments crisis, and Congress began to shrink from aggressive reforms, when they became a political liability. Congress lost power in 1996.

The BJP has travelled the reverse path. As an Opposition party, it railed againstmultinationals. In 1995, a BJP-backed state government shocked international investors by scrapping a multi-billion-dollar Enron power project. The same politicians revived it in 1997, taking a stake in the venture and claiming to have extracted a better deal for India.

Enron is still active

Enron's power plant went on line this year and convinced that there was a consensus for reforms. The Houston-based energy firm remains an ambitious investor. Last week, Enron bid for an oil-exploration licence under NELP, which most global energy giants shunned. The BJP has been building up its track record with foreign investors for several months. The government streamlined excise taxes and cut some subsidies to start shoring up public finances. Tax incentives lured back retail and foreign institutional funds, pushing the Bombay Stock Exchange's benchmark index to historic-highs, despite the two-month war with Pakistan.

Even after it was toppled in the trust vote in April, the caretaker BJP government madea controversial decision to replace licence fees for private telephone networks with a system, in which, they paid portion of revenue to the state. In the short run, India will forfeit millions of dollars in revenue, but the reforms will help rescue the troubled industry and billions of dollars in investment.

The emerging consensus around the reforms is evident in the BJP and Congress election manifestos. Both parties target growth in GDP to 8% a year, up from 5.8% for the year ended March 31. Both seek to lure $10 billion FDI per year, up from $2 billion last fiscal year. Both support laws to curtail the government deficit, which was 6.3% of GDP last year.

Congress manifesto

The Congress manifesto is the more detailed one. It pledges to let investors gain majority control of private telephone networks, up from the 49% ceiling. It also promises to sell stakes in state-owned firms.

However, Congress will have to rely on Communist parties to form a government, and these groups are fierceopponents of privatisation.

The BJP, by contrast, published a joint manifesto with its allies. It is mostly the same as that government's blueprint, but softens references to swadeshi, the necessity of foreign investment in "technology, new market practices and employment."

Foreign investors are careful not to endorse any political party. But they believe that, BJP, as long as it was led by Vajpayee, was better placed to accelerate reforms and create a framework for sustainable high growth.

Importance of Privatisation

"Privatisation is so critical to get growth moving and they have put it on the table," says Scott Bayman, president and CEO, General Electric Co in India.

Despite several indicators that pointed to a recovery in industrial growth, a recessionary mood persists. Otis Elevator Co, a unit of United Technologies Corp, built a modern factory near Bangalore in 1996 with plans to expand this year. Instead, the production is far below the existing capacity, and despite governmentincentives to spur large-scale construction, the plant is getting on by back-orders, not new ones.

"A lot of things hinge on the election," says V Varadharajan, general manager at the Otis factory. "If people think the government will last, then they will commit investment resources. We can't have an election every year."This craving for stability appears to have helped BJP. Recent opinion polls show that the BJP and its allies would build significantly on the slender majority, they had during their 13-month tenure. BJP itself, is projected to win more Parliamentary seats than last year, reducing its reliance on allied parties, though still less than 28%. Congress is projected to decline in seats and votes since the last election. Sonia Gandhi, enjoys far less popularity than Vajpayee as a candidate for Prime Minister, the polls say.

Staff reporter of The Wall Street Journal