New Delhi: The Lok Sabha 2024 election result has turned up surprises for many with the incumbent BJP-led coalition government retaining its majority but with a weaker BJP. Swiss investment bank UBS said the poll outcome was not something markets were prepared for since there was significant divergence from opinion and exit polls.
UBS went on to forecast 3 scenarios as a result of the poll outcome:
BJP single-party majority
BJP-led coalition
Weak coalition led by INDIA alliance
The Swiss brokerage forecasted how different policies may pan out in these 3 scenarios.
Fiscal discipline and infrastructure
This has been a focus area under the Narendra Modi administration is likely to witness a populist skew under an INDIA-led coalition. Since the BJP has not received a clear majority, its fiscal discipline push is also likely to have a populist skew.
This sector has been a priority area for the Modi administration and is likely to remain a priority in a BJP-led coalition. The INDIA coalition is likely to pay less attention to the infrastructure sector.
Digitalisation push and disinvestment
While the digital push is likely to accelerate under the BJP-led coalition, the INDIA bloc may not consider it a priority, said UBS.
Disinvestment of government stake in public sector units is expected to slow down under a BJP-led coalition. Markets are not so sure about this remaining a priority under the INDIA bloc, according to the Swiss brokerage.
FDI, PLI and clean energy
While UBS forecasts that FDI under the BJP-led coalition may remain below market expectations, the INDIA bloc is expected to maintain a status quo on FDI with an upside bias, said the brokerage.
There’s a possibility that the Modi government’s flagship PLI scheme for the promotion of manufacturing in India may receiove a further boost under the weak BJP-led coalition. The INDIA bloc may maintain a status quo but may show efforts to increase the share of manufacturing in India’s GDP, said UBS.
Clean energy transition may receive further boost udnr the BJP-led NDA, but is less likley so under the INDIA bloc, according to the report.
Domestic tourism and rural support
On the topic of domestic tourism, with the Modi government’s push for deeper air connectivity under UDAN scheme and push for revamp of Indian Railways, a BJP-led coalition will likley accelerate the push for it, said UBS. The INDIA bloc is expected to maintain status quo while maintaining a possibility of further boosting domestic tourism, according to the report.
Rural support is likley to receive the BJP-led coalition’s attention in terms of reforms and near-term support while the INDIA bloc may offer near-term support and more populist policies.
GST, land, bill and Uniform Civil Code
A BJP-led coalition may firther simplify the GST while the INDIA bloc may usher in a new GST 2.0 regime.
However, the land bill is unlikley to see light of day under both regimes, said UBS.
The uniform civil code, a key promise of the the BJP is likely to be kept on the backburner and oushed forward under the colaition, However, the INDIA bloc is unlikely to touch the UCC, said the brokerage.
Swiss brokerage UBS said that while the Lok Sabha 2024 poll result was not factored in by markets, there are 2 scenarios for government formation going forward. If the Modi government returns in a weak coalition or the INDIA bloc forms a government infrastructure and digitalisation may take a backseat, says UBS. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
