Taking a contrarian view, global financial services major DBS today said BJP’s victory in Assam polls is a positive for the government at Centre politically but will be “neutral” from the policy-making perspective and may not help expedite pending reforms like GST.
“These results are a positive for the ruling government ahead of a busy state election calendar in 2017.
“But for now, it does little to improve its tally in the Upper House and is thereby neutral for policy-making, including passage of the crucial Goods and Services Tax bill,” Singapore-based DBS said in a note today.
The GST Bill has been stuck in Rajya Sabha due to want of numbers at the BJP’s side.
Moreover, Assam sends in just seven members to Rajya Sabha and there is no vacancy from the state now.
After the poll results yesterday, some sections including commentators on economic issues have been voicing optimism about the passage of critical reforms like these as the BJP gains more strength.
The foreign brokerage said the markets looked beyond the state elections in Thursday’s trade and instead focussed on the rising odds of a US rate hike in June after the release of minutes of the Fed meeting, to end 1.2 per cent lower.
The report said portfolio flows and the rupee are likely to come under pressure in the short-term if strong domestic data convinces the Fed to follow-up with rate normalization plans.
It also flagged the issue of rising crude prices, which have breached the USD 50 per barrel, are a key factor to watch out for when it comes to India.
“From a risk perspective, the upturn in global crude prices is another important watch factor for the economy, even if non-threatening at current levels,” it said.
Eminent banker Uday Kotak recently highlighted that the bonanza brought about by the lower oil prices on key indicators like the current account deficit would be over if oil price starts inching up.