Can million votes affect your economic decision? Well, it does. Not because India is the largest democratic country with 1.35 billion population. But due to India’s growing economy and market. So, economists keenly analyse India’s movement. The first half of 2018 shows 7.2% GDP growth and slowed down in the last quarter. There are mostly 3 reasons for this. One is oil prices i.e. inflation, another is a pre-election quarter and the third one is US-China trade negotiation. In every 5year, India’s election gives the economy a new direction. The reason is, markets prefer stability and certainty. When Modi government took a position in the 2014 election, the stock market showed positive signals. With progress, policies, the decision in the last 5 years, it changed views of the world
regarding India. In the second half of 2018, the economy is volatile because of decisions and projects held by Modi government. Some events like the resignation of RBI governor impact pre-election as well as economy. It also includes some socio-welfare schemes which affect deficit financing. Markets enjoy a reform-oriented government. But it is assumed that stable government gives more input and market rise as compared to the coalition government. Now, considering the current political condition, there are high chances that the coalition government comes into power in 2019. This coalition can be from BJP or Congress side. To predict whether it’s a stable or coalition government, it gives a different impact. Like if the current government continues then decisions like GST and demonetization can be worked as per expectation while Congress’s new policy may close some ongoing projects. This will lead to instability of economy for some months. But this short-term
effect may or may not leave long term effect on the economy. With this, it is important to notice that our country’s political parties are die-hard opponents but have similar thought process up to some extent. Like Aadhaar Yojana continues and expanded by Modi government.
Thank You
Regards
Author- Tanvi Dange
Kautilya
IBS Mumbai
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