As all exit polls are predicting the continuity of the BJP-led National Democratic Alliance government for a third term at the Centre, the economy is expected to gain the most, and reform measures will continue, various global firms and domestic research agencies have said.

Polling to elect 543 members for the 18th Lok Sabha concluded on Saturday, June 1. Though counting of votes will take place on Tuesday, June 4, exit polls on Saturday predicted a comfortable majority (272+) for the BJP alone and more than 350 seats for the NDA. This is taking place at a time when economic growth in FY 23023-24 beat all expectations to record 8.2 per cent. Similarly, the fiscal deficit for FY24 shed nearly 20 basis points further to reach 5.6 per cent. An equally important development is that after a gap of 10 years, S&P Global revised its outlook on India to ‘positive’ from ‘stable’, thus providing a window of opportunity within 24 months for a rating upgrade after a gap of 17 years.

S&P Global feels that whosoever forms the government, economic reforms will continue. “Irrespective of the June 2024 general election results, we expect the incoming government to carry on economic reforms to support the growth vigour, continued infrastructure investment drive, and commitment to fiscal consolidation,” it said. Moody’s Ratings, too, feels strong, broad-based growth will likely be sustained with postelection policy continuity. “We expect policy continuity after the general election and continued focus on infrastructure development,” it said.

It highlighted that the current policy environment itself is providing a good investment opportunity. Private industrial capital spending is set to pick up with ongoing supply chain diversification benefits and the government’s Production Linked Incentive (PLI) scheme to boost targeted manufacturing industries. According to the Ministry of Commerce and Industry, companies have invested around ₹1.07-lakh crore through December 2023 across the 14 sectors covered under the PLI scheme, with exports surpassing ₹3.40-lakh crore since the scheme’s implementation. “Healthy corporate and bank balance sheets, rising capacity utilization and upbeat business sentiment also point to an improving private investment outlook,” it said.

Taking a cue from exit polls, Motilal Oswal Financial Services Ltd, in its report, said that the (possible) victory of PM Modi/BJP augurs well for the economy and capital markets as it provides stability and continuity in policy-making with a single-party majority government, which is expected to continue pushing its economic agenda.

Fundamentally, “India is witnessing its own mini-Goldilocks (steady growth and low inflation) moment with excellent macros, solid corporate earnings (Nifty ended FY24 with 25 per cent earnings growth and FY25/26 earnings are likely to post 14-15 per cent CAGR), focus on manufacturing, capex and infrastructure creation, and valuations at 20x one-year forward earnings. This verdict and consequent political stability and continuity in policy-making will act like an icing on the cake and keep India as the cynosure of all eyes, in our view,” the report said.

Post-election results and formation of the new government, all eyes will be on the full budget for FY25, which is likely to be presented in July. Most economists believe that the fiscal deficit target for FY25 is expected to be revised lower to 5 per cent or even below that. At the same time, the budget will also give details of the reform agenda for the next 5 years.

Post-election results and formation of the new government, all eyes will be on the full budget for FY25, which is likely to be presented in July. Most economists believe that the fiscal deficit target for FY25 is expected to be revised lower to 5 percent or even below that. At the same time, the budget will also give details of the reform agenda for the next 5 years.

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