A strong BJP led government provides the buoyancy that the markets need to step up reform
What do the election results in five states mean for India Inc and the economy as a whole? Will it usher as in the words of the Prime Minister Modi a new India? It may be too soon to say in the affirmative but the triumph in UP is definitely going to ‘UP’ the ante on reforms, including the roll out of GST.
All fears of a backlash due to demonetisation have now been laid to rest and BJP making inroads into Manipur, a Congress bastion for decades has shown that the Modi wave is indeed sweeping across the country. A strong majority brings in confidence and investments for Asia’s third largest economy.
Markets and politics connect in more ways than one. A majority government always provides buoyancy to the economy and investors show confidence. If the recent election results are any indication, it was what the doctor ordered. There are going to be decisive reforms, concerted efforts and a positive sentiment.
A good majority drives the economy and the kind of sentiment that is prevailing in the nation; this sentiment could extend till the next decade.
What this means for the economy is a new found confidence, a stable government, easy movement of policies and effective long-term plans. All concerns on the political front are now dissipated and the new mantra that Modi speaks about is poor to be given opportunities and not dole. This will have a far reaching impact as dishing out dole would only make people lazy but by giving them opportunities would mean to nurture entrepreneurs.
The pangs of demonetisation now a thing of the past, the Modi government is likely to widen reforms. The possibility of retaining power even after 2019 imminent as of now, the economy is bound to grow. Efforts to transform India from a soft state would now get a fillip. Political stability lends confidence and markets thrive on it.
There are still two more years to go before a complete assessment of his impact on the Indian economy could be made but for now, he seems to delivering.
During the 2014 elections, Indian economist Arvind Subramanian said that Modi’s intentions involved a Thatcher-like ‘Big Bang’ of policy moves but was not sure if Modi could pull it off. It seems as if he is in all earnest if not pulled it off, is on his way.