After the BJP bagged a majority in Prime Minister Narendra Modi’s home state Gujarat yesterday, top brokerages welcomed the move saying that a rural focus in policies is expected hereafter.
After the BJP bagged a majority in Prime Minister Narendra Modi’s home state Gujarat yesterday, top brokerages welcomed the move saying that a rural focus in policies is expected hereafter. Many top experts and market veterans said that it will now help the government to carry on its reforms agenda. “The government has already been focussing on the rural side and they have some of the policies which are looking at doubling farm income, improving rural economy etc. So those initiatives will definitely continue,” Harsha Upadhyaya of Kotak AMC told ET Now. Welcoming the news, Raamdeo Agrawal of Motilal said,
“This is the sixth time BJP is coming to power in Gujarat and do not forget there is a change of leadership in Gujarat. Mr Modi is no longer the chief minister. So, there is a voting for BJP. The continuation is there, there is no surprise on that count at least.” Amid the euphorias and jubilation, many top brokerages say said that the government must now look to focus on rural sectors.
Citi said, “BJP performed better in urban seats than rural therefore a rural focus in policies is expected hereafter. The verdict is unlikely to create any jitters but could make BJP more cautious in the run-up to the 2019 general elections. Rural pivot in policy focus will open interesting opportunities for equity investors.” On similar lines, global research firm CLSA said, “BJP will have to intensify pro-poor policies because of the close contest in Gujarat. Rahul Gandhi’s ability to bring anti-BJP parties together for 2019 elections will be a close watch. Market comforted with BJP’s 6th straight win in the state despite short-term disruptions. Relaxations in targets for inflation for fiscal deficits would be positive considering weak fiscal position in the state.”
Kotak Securities says that the government will have to revive investment. BJP will continue with execution of broader ongoing reforms in areas of fiscal (GST) and investment (ease of doing business). The party will also increase focus on specific programs to revive investment and the rural economy (increased spending on rural electricity, roads and water),” the firm said.
Edelweiss said that the people’s verdict holds important implications for the government. “BJP should pick up the message from its weaker rural performance in Gujarat considering the election calendar for next year. A policy bias towards fiscal spend with rural focus is expected. Election cycle will add to the swings in the market. BJP may put greater emphasis on rural and agriculture sectors,” the research and brokerage firm observed in its report.