The BJP’s extraordinary performance in Lok Sabha Election 2019 with another large parliamentary majority will see a favoring continuity in the macroeconomic policies in the next five years. However, the major challenge of reforms will remain an issue.
The BJP did get 303 seats and 354 with NDA alliance but the party does not have a majority in the Upper House of Parliament and the Rajya Sabha, which will pose hurdles in its way of legislative reform agenda. Nevertheless, the economic outlook sure looks positive for the second term of the Modi-led BJP government. As per surveys, it is expected to see a 7 percent GDP growth per year over the time period of 2019-2023.
On this Shubhada Rao – Yes Bank Chief Economist said the government (or BJP Party) should use this political opportunity to drive ahead of its agenda of incremental privatization.
As per some surveys, “Indian is forecasted to become the world’s fifth-largest economy in this year, exceeding the $3 trillion of total GDP and overtaking the United Kingdom. And by 2025, the India is also expected to forecast the Japan and becoming the second-largest economy in Asia-Pacific region.”
However, the government will have to face some external challenges that are inhibiting the current growth momentum and brace the economy from it.
According to Arun Singh, chief economist at Dun and Bradstreet said the new government will have to focus on the domestic demand and resolving the issues in the sectors like aviation, power, banking and non-banking financial companies. The slow global economic activity and trade could be troublesome.
The slower momentum can easily see in the high-frequency indicators of rural and urban consumption. With the slowdown in both demand and investing, the government will have to re-evaluate the implementation of its policy agenda and adjust priorities to accelerate growth.
Despite significant achievements in infrastructure developments during Modi’s first time, infrastructure development in key sectors like transport and power remain important priorities.
Nevertheless, if the Modi 2.0 even work at the same pace, we can expect a fairly good economic growth in the times of Modi 2.0 in the next five years.