ELECTIONS IN INDIA-ARE THEY A PRELUDE TO WHAT WILL HAPPEN UN THE USA?

The India stock markets surged after learning the outcome of a stunning election victory for a party that wanted financial and other free market reforms. Over the past five years or so India has stagnated in state over-control.

The election victory there is the result of similar conditions that now exist in the USA, but have been brought to a boiling point there over the last few years. The variety of Communist parties that wanted state control and made a lot of promises of "utopia" under their plans did not materialize.

So guess what, they all got tossed out in a stunning defeat that was not even anticipated.

India's stock market surged an unprecedented 17 percent, forcing trade to close for the day, after the Congress Party's definitive victory in national elections set the scene for long-delayed economic reforms.

Within seconds of trading, the Bombay Stock Exchange's benchmark Sensex vaulted 2,110.79 points, or 17.3 percent, to 14,284.21, triggering the historic shutdown Monday. Infrastructure, banking and real estate companies led gains.

After month-long elections that ended on the weekend, the Congress Party alliance unexpectedly captured 261 seats in India's 543-seat Parliament -- one of the most crushing electoral victories in nearly two decades of fractious coalition politics.

Putting to rest fears of an unwieldy coalition, the victory raised hopes of a revival in foreign direct investment and economic growth, as well as tax reform and significant infrastructure spending.

The near collapse of India's once powerful communist parties -- which lost more than half their parliamentary seats -- paves the way for long-awaited economic reforms, many of which the Left had blocked over the last five years.

The Congress party now has more room to ease restrictions on foreign investment in insurance, retailing and banking. The government may also sell some of its stakes in state-run oil, banking, and fertilizer companies. The nation's pension regulator could get proper legal standing, which would encourage greater investment. And some steps might be taken to loosen hidebound labor laws, like allowing contract labor, analysts and business groups say.

Citigroup economist Rohini Malkani said the result would likely revive India's investment growth, which was a key driver of the nation's four-year boom that's now waning in the face of the global slump.

"The big question - is it a game changer? Can India get back to the high growth, high valuation of recent years? This event probably does open up meaningful possibilities, but there's a lot to do, and there could be a lot in the way," she said in a report.

Trading has never before been halted due to an upward swing in stock prices, according to the Bombay Stock Exchange.

The last time trading circuit breakers, which are designed to temper wild market movements, were triggered was January 22, 2008, when the Sensex plunged on fears of a U.S. recession.

The National Stock Exchange, India's smaller second exchange, was also closed after its Nifty 50 index gained 651.5 points, or 17.7 percent, to 4,323.15.

Angel Broking managing director Dinesh Thakkar said investors, many of whom had been sitting on cash, welcomed the end to uncertainty.

"We will see lots of reforms and spending on infrastructure," said Thakkar, who predicts a long bull run for the market.

"Compared to other emerging markets, we had underperformed by 25 to 30 percent because politics in India were unstable," he said. "Now that there is no event risk and there is a strong government, we will catch up."

In their euphoria, Indian traders shrugged off news of weak company earnings from the region, which dragged other Asian markets down Monday. Japan's benchmark Nikkei 225 stock average fell 226.33 points, or 2.4 percent, to 9,038.69.

Despite the high sprits, even within India there are headwinds to change. Congress is unlikely to curtail costly social welfare programs which have added to the budget deficit, just like the new costly programs in the USA.