State and market, though considered to be different entities, often share a rather relational and interdependent dynamism. The intricate mutuality is evident in the financial ties to global politics. This relationship is most amplified during the elections in a modern democracy. The 2019 Lok Sabha elections is a recent example of the same.
The market in the Post Lok Sabha Elections 2019
The historic victory of BJP in this election under Narendra Modi is looked upon with high hopes. The promise of a New India will emerge with possible economic reverberations. Soon after the declaration of the results, the bell weather stock market index, the Sensex reached a record high of 40,000 before closing in at 38,811.
This phenomenal rise was attributed to the stability in government as BJP was re-elected to the office. However, economic boom such as this, according to experts is not long lasting. Because fundamentally, Sensex is short term about sentiment and long term about fundamentals.
NDA Government and Indian Economics
The previous five years of the BJP government have characteristic economic reforms that had significantly changed the economic layout of the nation. Be it the overnight demonetisation that let out a frenzy of note exchanges or the introduction of GST or even the controversial 10% reservation for the economically backward section within the general community, all these moves shook the Indian economy in significant ways.
There were positive, profitable changes in the economy like the improved GDP rate while there were several negative impacts, like bad loan rates, temporary disruption of the economic growth and long term unemployment issues that are still to be tackled. But, now freshly out of the election season, this victory of BJP is looked upon with intense curiosity by market and the experts.
The future of Indian Economy
1. Euphoria in stock markets: The historic win of BJP has triggered a frenzy in stock markets with Sensex approaching 40000 and Nifty aiming between 10500 and 11000, says Morgan Stanley.
2. Possibility to stabilize economy: According to an ANZ research, being re-elected to the office is a chance for the ruling government to reinforce its agendas and propel its policies and reforms after a lacklustre 2018.
3. Likely boost for infrastructure: Modi's manifesto this time promised 1.44 trillion US dollars for infrastructure boost in India. This is a secure investment considering the ambiguous global market and India's corresponding position when it comes to export of goods.
4. Focus on Agriculture sector: Farmers, being the backbone of the nation and agriculture being the spine of our economy, the numerous farmer suicides and outcry of poverty and injustice faced by our farmers in recent years is a disgrace to all of us. A rejuvenated focus on the primary sector is one of the promises which can have a significant effect on our economy.
Things to take away
The sudden boom in the economy post elections, however, could be a result of sentimental upheaval and could quite possibly be short-lived, according to experts. The economic strategies that will be adopted by the government are crucial from both a financial and political standpoint. The predictions direct to a fertile ground for the re-elected government to improve the momentum of India's economic growth. At an individual level, all these are hints for each one of us to notice the changing trends and invest wisely. Experts suggest that investments in infrastructure and the primary sector, the focal points of the Modi government manifesto are likely to be successful and rewarding. However, pitfalls are not to be overlooked either. A more stabilized picture of the economy would surface once the triumph of Lok Sabha elections neutralises.
- Ananda Krishnan
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