History has repeatedly shown that the poll outcome has a significant bearing on the economic policies
Just a day ahead of counting of votes for 2019 Lok Sabha election, discussions are on about the likely impact of the new government’s policies on the economy going ahead. History shows that the election outcome has a significant bearing on the economic policies. In the current context, where exit polls show massive victory for BJP-led NDA, the discourse become all the more interesting. The policies of the last government may continue for next five years if BJP-led NDA gets elected, said a veteran economist.
“This will also mean that the direction of reforms are clear. Given that the first 5 years have been on creating a framework, we may expect some directed effort in areas of spending in infra, agriculture besides further easing the business environment,” Madan Sabnavis, Chief Economist, CARE Ratings told Financial Express Online.
Further, a strong mandate for an NDA government would mean a continued push for economic reforms, stock market veteran Porinju Veliyath told ET Now in an interview today. if Modi is re-elected, the new government will follow up on the reforms brought by it in its first term, he added.
However, a hung parliament with BJP leading the government would mean that many more social programmes would get introduced. “A hung parliament with a BJP government will still move forward in the same direction but the pace will remain checked depending on the coalition partners,” he said.
In case of Congress-led coalition winning the people’s mandate, the welfare schemes such as NYAY would dominate, he noted. “A relook at some reforms like UDAY will be on the cards as will the approach to banking in light of the experiences with IBC. I do not expect any significant change though like say FDI in retail or privatization of PSBs,” he also told Financial Express Online.
On the other hand, there are various broken things to fix in the economy and address the hardships, irrespective of which party or coalition forms the government, Abhimanyu Sofat, VP-Research, IIFL told Financial Express Online. The new government has various challenges lying in front of it; the weakness in economy due to muted demand needs to be tackled irrespective of the government that gets elected, he added. It’s important for the new government to keep the fiscal deficit in check, Abhimanyu Sofat said, adding that the rising crude oil prices always pose a threat to the Indian economy and should be closely watched.