A historic mandate for the National Democratic Alliance (NDA), that has won over 350 seats in the Indian general election, on Thursday, has raised expectations of a higher pace of economic reforms.
It was spectacular day for the Indian markets as the Sensex climbed Mount 40K, while the Nifty50 also surpassed the much talked about 12,000 mark in a single trading session as trends indicated that the BJP is all set to form the government for the next 5 years.
According to the analysts,the first priority of the government is rural development to ease farm stress through the development of rural infrastructure (roads, housing etc) and boost farm income and infrastructure spend, address agricultural distress, and encouraging employment.
The second priority of the government would be driving capital investment in infrastructure development especially water linkage, roads among others, as can be inferred from the figure of Rs 10,00,000 crore stated in the BJP manifesto and highlighted by Modi in his speeches (Water is next big priority after toilets; to be done through river linking as the key project.)
The UN World Economic Situation and Prospects report, released on Wednesday, said India was in line with the global trend in terms of a broad-based economic slowdown, led by lower consumption demand, industrial production and exports. The trend prompted the UN to lower its FY20 GDP growth forecast (for India) to 7.1 per cent from 7.5 per cent. Consumer-facing businesses in categories such as staples and discretionary are already seeing their slowest growth in six quarters, impacting earnings.
To me, it is very simple — the people of this country want Narendra Modi to continue his job of restructuring the Indian economy, as well as the governance structure, and lead the country on to a high sustained growth path,” said RC Bhargava, chairman of Maruti Suzuki India.
A Vaidheesh, president of Organisation of Pharmaceutical Producers of India, said that healthcare challenges needed to be addressed urgently. “The first is increasing public spending on healthcare. Second, policy support is necessary to address healthcare financing, including encouraging innovative new models such as social impact bonds. Third, policy support for significantly improving the quality of our healthcare infrastructure is crucial, from primary health care centres through district hospitals and tertiary care centres,” he said.
Rashesh Shah, chairman and chief executive officer of Edelweiss Group, said: “A majority mandate will help to build on some hard reforms and address some of the challenges upfront. The current liquidity tightness in the markets has to ease, and there is a need as well as an opportunity to get both risk appetite and growth back.”
G. Murlidhar, MD & CEO, Kotak Life Insurance, said " With the strength of this majority, the government can take bold and swift steps to further its promises of reducing corruption, increasing ease of business, and ensuring a simpler taxation regime."
Anuj Gulati, Managing Director & CEO, Religare Health Insurance said, a good health index is the fulcrum for a progressive and productive society.
“We gladly welcome initiatives that will help facilitate access to quality healthcare for all stratas of the population. Since health insurance is an effective healthcare financing tool, it would be most beneficial to have programs/initiatives that drive health insurance enrolment and therefore address the challenges of under-penetration and inadequate coverage,” he said
Mahesh Bala, MD & CEO, Kotak General Insurance said, the fact that India will see another term of a stable government at the center is the best news for business and markets.
“For the insurance industry we look forward to private investment making its way back, automobile sector picking pace, increase in per capita income; which will help drive consumption and growth,’’ he added.
Continuing the digital drive and formalization of the economy will help the financial sector a lot as this will lead to increased penetration of insurance, financial and investment products. The mature Indian electorate has once again delivered a decisive mandate, which can make “Resurgent India “as an idea whose time has come, said Bala.Anil Agarwal, chairman of Vedanta, said there is a need for simplification of policies and tackling critical issues such as job creation. “Strengthening India’s position in global trade and ushering in more tax-friendly laws is important,” he said.
The S&P BSE Sensex and Nifty50 have already rallied over 10 percent so far in 2019 and the upside looks fairly limited from here, suggest experts.From the stock market point of view,sectors which are likely to hog the limelight include consumer companies, farm equipment, rural financing companies, building material including cement and agri-inputs companies which will boost rural demand.
The recent estimates suggests that the maximum upside remains fairly limited for at least benchmark indices, and investors should be more focused on individual themes which are likely to create wealth in the next five years, suggest experts.