Distress in the farm sector and rising unemployment have dented Modi's popularity ahead of elections to be held from April to May.
India will continue to implement economic reforms irrespective of who wins the general elections beginning next month, a key government advisor said, seeking to reassure investors about policy continuity in one of the world’s fastest-growing economies.
As reforms in the past few years – from tax to inflation targeting – start to manifest, the economy’s potential growth rate will rise by 50 basis points to 7.5% to 8%, Krishnamurthy Subramanian, chief economic advisor in the finance ministry, said in an interview. He cited the global slowdown and trade tensions as risks to the economic growth, which is seen at 7% in the year to March 31.
“The goods and services tax has given us a template for reforms absent a crisis,” Subramanian said on March 11, referring to the nationwide tax introduced by Prime Minister Narendra Modi in 2017. “Global money cannot find at this point a better country than India.”
After sweeping to power in 2014 with the biggest mandate in three decades, Prime Minister Narendra Modi has pushed through long-pending reforms, such as a bankruptcy law and an inflation-targeting framework for the central bank.
Investors are starting to worry about the policy outlook and economic imbalances if Modi fails to return to power. Foreign direct investment into Asia’s third-largest economy fell 7% in the nine months to December from a year earlier.
Distress in the farm sector and rising unemployment have dented Modi’s popularity ahead of elections to be held from April to May.
While reforms under Modi helped India climb 23 spots to 77 in the World Bank’s ease of doing business rankings, he’s failed to win support from Opposition lawmakers to overhaul laws governing land acquisition and labour. “Land and labour will be important for any government,” said Subramanian.