Saffron sweep- It’s Time to Trail Blaze

“Governments will come and go, but this nation should stand tall.”

- Atal Bihari Vajpayee

On the 23rd of May, India re-witnessed BJP’s overwhelming victory taking 303 seats in the Lok Sabha. Prime Minister Narendra Modi stormed back into power. BJP’s vote share heads for 38% against 31% in the 2014 elections. BJP registered its best electoral performance. How will the new government bring the Indian economy back on track and propel it to greater heights? What is the blueprint of their plan?

History in a nutshell:

Elections are a concoction of anxiety and surprises. The election period bears extreme market volatility that makes investors’ blood run cold. India has seen the ups and downs of several political parties, each with their economic agenda. In particular, several key financial parameters such as stock market performance, inflation rates in the country, gross fiscal deficit, currency exchange rates, index of industrial production, etc. are directly affected by the turbulence ensued by the speculations running rife during pre and post election periods, and every election till date has served as a testimony to that statement till date. The following graphs showcase the perceptible impact on the aforementioned parameters when the dance of democracy is in motion.

The immediate effect of the exit polls and the elections on market indices:

The exit polls that hinted at the victory of the BJP pushed the Sensex by 3.75% and the Nifty by 3.69% to close at a record-breaking high at 39,352 and 11,828 respectively. The BJP’s colossal win took the Sensex and the Nifty to new intraday highs with the Sensex crossing 40-thousand mark and the Nifty surpassing 12000.

The new Economic Agenda:

The newly elected government already seems to have started on its second term agenda. An agenda to improve private investment and stimulate demand has been chalked out. This government has decided to shift its focus towards areas dealing with immense unemployment, inflation and credit, and the investment sector. Policies to improve the efficiency of disinvestment, thereby closing down non-strategic Public sector undertakings, may be chalked out

Economic bucket-list

The government needs to roll out labor and land reforms to encourage large scale manufacturing, thus enabling the goods and services to compete in the domestic and international markets. Monetary policies that play a role in the banking sector have to be laid out efficiently. These policies must give birth to a robust and efficient banking sector to attract private investment. A few of these may include merging public sector banks, buying assets of non-banking financial institutions to enable other corporations to raise resources for further production and development.

In the real estate sector, the issues about redevelopment should be made hassle-free. There has been a radical change in real estate investments with the implementation of REITs (Real Estate Investment Trusts); the government should ensure the smooth functioning of this new system. One of the main obstacles that this government needs to overcome is the challenge of reviving demand in the country by placing more money in the hands of the middle class, thus persuading people to spend more. Credit supply in the economy may increase by cutting personal taxes as was promised in the interim budget. The government also plans to simplify taxes throughout the economy.

The need of the hour is to attract foreign investment by ensuring efficient and fast-paced economic growth to gain confidence among investors. More support must be provided to farmers under the PM-Kisan scheme in terms of money and area. The new government must look into nurturing and supporting startups and entrepreneurship undertakings. The government may look into revamping ‘Make in India’ to create more jobs and push GDP.

Finally, measures to address the water crisis, especially in the primary sector for irrigation and agricultural purposes and improved healthcare facilities in all districts and villages are vital and could shape the productivity of the agrarian sector and human resource creation respectively.

All of us have witnessed the roaring success of the BJP. Now, It is up to the ‘government once-again’ to join hands with the people and push the country as a whole to fight the economic battle, ‘whatever it takes.’