Corporate India will be hoping the Modi government now moves forward on key pending reforms
India's Prime Minister Narendra Modi (for illustrative purposes only)
Image: Adnan Abidi / Reuters
The historic victory registered by the Bharatiya Janata Party (BJP) in the Uttar Pradesh and Uttarakhand elections and its encouraging performance in Manipur will likely give a boost to the Narendra Modi government’s resolve to take the next phase of reform forward.
The crucial takeaway from the UP polls is that Modi’s gamble of demonetisation – which had severe critics from several quarters – has paid off in a major way, with the UP results giving BJP a thumping majority of 325 seats in a 403-member house and a 41.4 percent vote share. This, together with the fact that BJP has got acceptance even in states like Manipur, is likely to embolden the government to take on further reform now that it is even more firmly entrenched in the driver’s seat. There’s also the fact that, over time, the numbers in the Rajya Sabha are expected to turn into the government’s favour, clearing further roadblocks for it. Finance minister Arun Jaitley has been quoted as calling this gradual positive shift in numbers a “creeping acquisition”, playing on an M&A phrase.
With the Goods and Services Tax (GST) coming up and expected to be rolled out from July 1, the election results are bound to add to the confidence levels of the government as it pushes through this key reform which is expected to add to the growth rate of the economy over time.
An important element which comes through from this set of elections is the clear shift of Narendra Modi to a pro-poor leader who is willing to take bold bets to take his agenda forward
An important element which comes through from this set of elections is the clear shift of Narendra Modi to a pro-poor leader who is willing to take bold bets to take his agenda forward. The fact that this image has struck a chord with the electorate is evident from the massive majority which BJP has secured in Uttar Pradesh. The interesting thing is, a pro-poor government may also make industry and the business world curious about whether this will come at the cost of further reform. In other words, will a pro-poor Modi be bad news for industry and business?“ It [the result] has important implications because till now the narrative in politics was that good economics is bad politics