Medium-term growth prospect of the Indian economy is improving, and with the GST Bill likely to be passed later in the year, it will only improve further, says an HSBC report.
According to the global financial services major, out of the four key Bills, three have made it to Parliament (the Aadhar Bill, the Bankruptcy Code, and the Bill that formalises the Monetary Policy Committee), which has come as a shot in the arm for the economy.
“With a possible likelihood that the Goods and Services Tax Bill will get passed later in the year, India’s medium term outlook would only improve further,” HSBC said in a research note.
On the state elections results, the report noted that though these results show that BJP’s popularity is “not waning”, it still leaves a “tricky Upper House math.”
BJP lacks majority in the upper House of Parliament, and this has put brakes on passage of some Bills.
“Its victory in Assam is not expected to increase its seat share in the upper House during the current term of the government as the next set of Assam’s seats come up for renewal only after the government’s current term ends in May 2019,” HSBC explained.
The BJP-led NDA government assumed office on May 26, 2014 with a thumping majority in the Lok Sabha, but some key legislations, including the one on GST, have been stuck in the Rajya Sabha due to opposition, mainly from the Congress.
“As such, the BJP will still have to reach out to smaller parties to ensure passage of upcoming Bills such as GST,” HSBC said, adding that “thankfully, the cohort of potential allies is likely to increase over the summer”.