Modi 2.0: This could be NDA government's growth agenda

Dheeraj Singh

The general election results are in. The BJP-led National Democratic Alliance (NDA) is on track to better its seat count from 2014. Not only did the ruling coalition retain the seats from the previous Lok Sabha election, but also expanded its footprint to cover almost the entire country.

The Modi-led government will now shift its focus on governance. The immediate task in hand would be to present the full budget for the year to supplement the interim budget presented in February. Although, little change can be expected on that front since the government constituents are the same as last time.

The financial markets would expect stability and continuity on fiscal policy and a stable tax regime.

Dheeraj Singh

Head of Investments|Taurus Asset Management Co. Ltd.

• 'Q3 earnings expected to be a mixed bag; could be company-specific'

Significant announcements/policy measures had to be kept on hold for a few months as the model code of conduct was in place. With the formal announcement of the election results, the model code would also be lifted and we can, therefore, expect a slew of policy announcements from the government as well as the RBI.

For regulators like RBI and SEBI, the immediate concern would be the fallout in the credit markets of the IL&FS bankruptcy and the consequent crisis in the NBFC segment. The crisis in the debt mutual fund category on account of credit defaults and credit rating downgrades needs immediate attention before investors lose trust in mutual funds.

The equity finds had to take the long route in regaining investor trust after the Morgan Stanley mutual fund debacle in the mid-90s. We sincerely hope that debt mutual funds too do not go into a long period of hibernation.

The new government will also have to deal with recent bankruptcies in the airline and telecom sector, which have put the banking system under renewed stress. Delays and glitches in the Insolvency and Bankruptcy Code (IBC) – many of them due to judicial pronouncements – will also need ironing out.

The economy has witnessed a slowdown in recent times as seen with the relatively muted performance from auto companies. The new government would have to get its act together soon, to ensure that the slowdown does not become pronounced. On this front, it will need to focus on policies which ensure significant job creation.

Another area where the government will have to double down its efforts is in the “Make in India” programme. We have made some progress, but it has largely been an “Assemble in India” outcome so far. The government needs to pursue policies that ensure genuine product development and manufacturing within the country.

To conclude, the incoming government has its task cut out on the economic management front and we hope it gets down to business with serious intent and fulfils the dream of the Prime Minister – Sabka Saath, Sabka Vikas.

(The author is Head of investment at Taurus Asset Management.)