There is every indication that 2004 will turn out to be a glorious year. Even the conservative IMF is ratcheting up its growth forecasts. It is encouraging to note that the past laggards of growth -- Africa, Latin America and Japan -- are joining the globalisation party.

Perhaps it is appropriate that as celebration, the two most populous democracies in the world -- India and the US -- are going to the polls.

What determines electability is hotly debated. The consensus in the US, especially after Clinton's doctrine of "It's the economy, stupid", is that domestic policy and economic performance matter the most.

In India, we are still far from convinced that issues like caste, religion, temple policy, etc. do not matter. Both democracies give an important place for 'leadership', but can we define 'leadership' with bad economic performance?

For the last several decades, at least since Vietnam, foreign policy has been a non-issue in the US. When Nixon won in 1968, the economy was doing well, but thousands of draftees and their parents were deeply dissatisfied with US foreign policy. The economy did not matter that much as the non-war party, the Republicans, won.

The country turned inward and concentrated on domestic performance until 9/11 forced it to look outward. While both Bush senior and Bush junior will seek re-election after a war with Iraq, there are important differences.

In 1991, Iraq was seen as the aggressor; today, besides the neo-cons, the universal perception is that US was the aggressor, especially since WMDs have done a vanishing trick. It also does not help Bush to learn that his opponent Kerry has consistently had the politically and foreign policy correct view that the US should have invaded Iraq with UN approval.

There are good reasons, therefore, for foreign policy to be important in determining the US presidency in 2004. On this issue, for most observers, Bush is a loser. Nor is he helped much by the always tricky 'leadership' question.

While Kerry's leadership abilities have not been tested, it is the case that no one has gone broke betting against Bush's leadership capacity. The betting has got to be against the incumbent.

A near open and shut case against Bush? No. Because of the seemingly all important economic factor. Very soon the US is going to get out of its job slump, the economy per se having recovered a year ago. When that happens, and likely to happen sooner than later, the Democrats fear that the US voter will get back to normal and reward the ushering of good times.

This inference is based on history -- but politics is often more complicated. And even the economy may be showing good times for precious little time to make up for the other Bush negatives.

It is unlikely that on several economic parameters, the US economy will be better in November 2004 than November 2000. The all important unemployment rate was a little over 4 per cent then, today it is at 5.6 per cent.

Aggregate employment is stagnant at 2000 levels. Inflation is down to 1 per cent from about 2 per cent in 2000 -- at such low levels, a decline in inflation is not necessarily great news. All that Bush Jr. will be able to show in November is that the economy is on a recovery path.

The parallels with November 1992 are too eerie to be ignored. An incumbent Bush, a war with Iraq, economy on the recovery path a little bit too late, and a resurgent and united opposition party with a well liked leader.

Kerry is no McGovern and nor is he a Dukakis and other forgettables from the Democratic armoury. He is both JFK and Clintonesque, and after not necessarily a too close to call fight is likely to emerge as the next US president.

Forecasting the Indian election is a lot easier. No matter what the parameter, Mr  Vajpayee shines both absolutely and especially in comparison with the also-rans in the race.

With each leadership year, the Congress's fortunes sink, Vajpayee star ascends, and flattering comparisons with Nehru become acceptable. Soon, there will be a time when revisionist thinking on Nehru will catapult Vajpayee to the top all time Indian leadership position.

While both Vajpayee and Bush have been nominated for the Nobel peace prize, the former is a surer bet even if the Kashmir issue is not fully resolved.

The important point is that a significant advance is likely to be made on an important beginning initiated by Mr  Vajpayee some years back. Peace is near at hand -- all it needs is an Indian (or Pakistani) victory in the forthcoming cricket series!

Leadership, foreign policy and peace -- and we have yet to talk about the economy. In 1999, inflation was at an onion-stink high of 7 per cent, and growth was fast decelerating to an average cruising speed of about 4.5 per cent per annum.

Nominal interest rates were in double digits and real interest rates at around 8 per cent stifled industrial production -- it remained submerged below 4 per cent annual growth. The stock market boom-bust had yet to come -- the index was at its six-year average of 3400.

India was yet to talk about the industrial revolution, though there were murmurs that we would not need it after all -- just IIT software would take us to a developed country status. There was little confidence in the government, and even less for the politicians that manned the post.

Contrast that with today. Inflation at 5 per cent and likely to be even lower next year. Growth at 8 per cent and even the opposition party economists are forecasting a 6 per cent plus growth next year.

Interest rates have fallen, both for government (at 5 per cent today) and for the corporate sector at around 7 per cent; the latter mostly thanks to lower borrowing costs from abroad.

Capital account convertibility is a chattering reality and the Reserve Bank mops up the dollars to keep the currency from appreciating with respect to its competitors (read China). Reserves are at $110 billion and climbing.

Opposition (Congress and left-wing) economists complain about the lack of job growth in the formal sector (which accounts for less than 10 per cent of total employment).

This is cause for celebration as it means that the government is shedding off its obesity. Wage growth for the poorest rural worker, over the last twenty years, has approximated GDP per capita growth. And rather than politicians, the judicial system is under attack for its corrupt behaviour.

Today, poor and rich parents alike worry about not whether the child is attending school, but whether she is getting a proper education. Things could not have improved more for the average Indian (except maybe we could have lost by a lower margin to the Australian cricket team).

The emphasis is on change, not on absolute levels. But political leaders nowhere are elected on inherited levels, they are everywhere elected on change, and prospects of even better improvement in the future.

On both counts, it is Vajpayee in India and Kerry in the US. The beginning book is at 50.5-49.5 per cent in favour of Kerry. In India, the first past the post system means that seats matter.

At present, the forecast for the seats obtained by the Congress is firmer -- something like 80 from the 1999 level of 114 seats.

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