UP Elections Victory Likely to put Govt’s Reforms Agenda Back on Track

With the election verdict in Uttar Pradesh giving Bharatiya Janata Party (BJP) a landslide majority in the state, the Indian economy is expected to touch newer heights. The stunning victory of BJP is likely to give an added impetus to government’s reform agenda, boost stock markets up, and hasten the implementation of big-ticket measures such as the goods and services tax (GST).
The election outcome, which comes in the backdrop of demonetisation, signals that people want the Centre to take bolder steps to stem black money, root out corruption and bring back illegal money from abroad. 

The BJP’s triumph in the state of Uttar Pradesh will give added power to Prime Minister Narendra Modi to aggressively push his economic agenda. This has also raised hope among investors that the BJP will embark on new reforms to boost growth in Asia’s third biggest economy, and tackle the corruption and red tape that has dented India’s potential. Investors are also eying pro-business reforms in Uttar Pradesh, such as digitising land records and making permit applications easier.

The Indian economy clocked a faster-than-expected growth of 7 per cent in fiscal third quarter, notwithstanding the demonetisation of high-value banknotes in November and the resultant impact on output as well as the consumption. The Global ratings agency Fitch expects Indian economy to grow by 7.1 per cent in the current fiscal before stepping up to 7.7 per cent in the next two financial years.

Going forward, the Narendra Modi led government is expected to remain focused on measures that will help to improve the ranking in terms of ease of doing business,significantly and persistently in the period ahead. Implementation of the GST from July will simplify indirect tax structure, reduce geographical fragmentation and widen the tax base, which will prove to be transformational for the Indian economy in the medium term.

With Narendra Modi now firmly entrenched in power until at least 2019, and perhaps further ahead, the focus will be on whether Modi can deliver on his promises of rapid development.

Latin Manharlal