Bikky Khosla | 27 May, 2019
Prime Minister Narendra Modi has roared back to power as
hundreds of millions of Indians gave a thumping mandate to the National Democratic
Alliance led by the Bharatiya Janata Party. While BJP has won more than 300
seats on its own and the NDA has 350 seats in the Lok Sabha, the Congress
suffered its second worst defeat. The clear mandate that will lead to formation
of a stable government at the Centre is seen as good news by economy watchers.
The Indian industry has hailed Modi for this historic
election win. According to industry leaders, continuity at the Centre would
enhance chances of more economic reforms and ensure stability of the recent
reform measures, such as GST, IBC and RERA. It is also widely expected that a stable government would bring in more foreign investment, as a result of
which both demand and consumption will pick up, and growth will move higher supported
by lower interest rates.
All sound good, but this is only one side of the story.
Several recent reports show that economic challenges abound at this moment. An
ongoing series of articles published by a news agency points to several such challenges,
including slowing GDP growth, low private investment, slacking consumption-driven
demand, dismal credit off take, stressed bank balance sheets, falling household
saving, farm sector distress, job crisis, exports threatened by rising
protectionism, and so on. These concerns are, no doubt, real.
However, pessimism shouldn’t be the only way of looking at the current macroeconomic situation. Before
the elections the general assumption was that there
would be a hung parliament, but fortunately our voters have given
a clear mandate to the Narendra Modi-led government, which in the last five
years did some great jobs towards reshaping the
fundamentals of the Indian economy. I hope Modi’s second term won't fall short
of the nation's expectations.
I invite your opinions.