MUMBAI:Two multinational banks,
Nomura
and
HSBC
, have said that the upcoming
general elections
in India polls point to continuity at the Centre, and have called for tougher reforms, including those related to land and labour, to spur growth.
The reports coincided with finance minister Nirmala Sitharaman’s statement, underscoring the need for a stable govt to achieve the goal of becoming a developed country by 2047.
“We have to make efforts, so the GDP grows, and the benefits reach to all.
GDP growth
doesn’t happen automatically… efforts are required at micro and macro levels and on the ground,” she said at a university in Vizag.
In a research report, Nomura analysts Sonal Varma and Aurodeep Nandi said opinion polls were pointing towards continuity in the Lok Sabha polls, which also suggests policy continuity. While estimating average annual GDP growth of 7% between 2024-28, Nomura said, govt may consider the more politically contentious reforms around land, labour, and capital, judicial reforms, as well as simplifying direct and indirect tax administration, including bringing electricity, oil & gas, and alcohol under the GST ambit.
HSBC economist Pranjul Bhandari went a step further to suggest that BJP’s tally may increase from 303 in 2019 to 323 seats this time, with the NDA coalition reaching 377.
Bhandari said that implementing easy-to-moderate reforms can deliver 6.5% growth over the medium term. “For growth over 7.5%, moderate-to-hard reforms will be necessary,” the HSBC report said.
The report categorises infrastructure, facilitating business in electronics and EVs, and privatising some PSUs as easy reforms. Moderate reforms entail improving local govt funding, simplifying tax systems, and upgrading infrastructure financing models. Difficult reforms involve subsidies, implementing land and labour reforms, and modernising education and healthcare systems.
PM Narendra Modi has asked civil servants to ready a 100-day plan that he intends to announce if he secures a third term in office. The pace of reforms — as well as decisions related to privatisation and asset monetisation — have slowed down for over a year as govt got into the election mode.
BJP has gone to town on the economic performance, something Sitharaman also underlined on Monday as she sought to rebut her predeces sor P Chidambaram’s claims.
The Nomura report suggested that India will remain the fastest growing major economy, expanding 6.6% this fiscal. In its monthly economic review, think tank NCAER said that India was on course to grow at a pace of over 7%.
“These high frequency indicators, coupled with a more benign global outlook projected by the IMF and WTO, bode well for the Indian economy during the current year… Projected acceleration in both global growth and trade volumes as well as forecast of an above normal monsoon indicate that the Indian economy can again attain growth rates higher than 7% during the current fiscal,” said NCAER director general Poonam Gupta.
