The exit polls suggested a decisive victory for the BJP-led National Democratic Alliance (NDA) with a projected two-thirds majority in the lower house of parliament. However, the emerging results indicate a closer contest, with the NDA leading in 290 seats and the Congress-led INDIA bloc trailing with 235 seats (TimesNow).
This unexpected margin has prompted India Inc. to reassess its expectations, balancing cautious optimism with strategic considerations for the future. Industry leaders emphasized the importance of policy continuity to sustain India’s projected economic growth of 6.8% in FY25.
Rishabh Goel, co-founder and CEO of Credgenics, highlighted the opportunities for technology companies under the vision of ‘Viksit Bharat’ (Developed India).
“We expect the new government to facilitate further expansion of the digital ecosystem while addressing key challenges such as interoperability, policy frameworks, cybersecurity, financial literacy, and the digital divide,” Goel stated. He underscored the importance of policies that support ease of doing business, nurture tech-startups with access to funding, and protect intellectual property.
However, some industry experts believe that the narrower victory may influence the government’s approach to economic reforms. Jyoti Prakash Gadia, Managing Director at Resurgent India, noted, “The landslide victory as predicted by the exit polls does not seem to be happening. This is likely to make the government have second thoughts on difficult economic reforms, and the same may not be as aggressive as earlier anticipated.”
Gadia suggested that the emphasis might shift towards ground-level welfare schemes and employment generation, while infrastructure development could remain a key focus to maintain stable growth.
Market Reactions and Investor Sentiment
The financial markets, which initially reacted positively to the exit polls, experienced significant volatility. The indexes saw their worst fall since March 2020, erasing all of Monday’s gains. The volatility index spiked to its highest since March 2022 at 29.79.
Read more: Election Results: Opposition says Exit Poll done to influence share market
A report from Motilal Oswal highlighted the importance of political stability and continuity in policymaking for economic stability. “The victory of PM Modi/BJP augurs well for the economy and capital markets as it provides stability and continuity in policymaking with a single-party majority government,” the report noted, likening the current economic conditions to a “mini-Goldilocks moment” with strong macros and corporate earnings.
Expectations from the New Government
Industry players also outlined specific expectations from the new government. Amit Prasad, Founder and CEO of SatNav Technologies, called for regulatory reforms to make agencies less coercive.
“Every small default does not indicate a fraud. With the collection process of TDS, PF, ESI, GST becoming so strict, there should be a lenient approach of nominal fines with no future repercussions for short-term defaults,” Prasad suggested. He also advocated for a change in the language of government communications to reflect trust and kindness towards citizens.
Collaborative Decision-Making
Nilesh Choudhary, Founder of Aikyam Capital Advisors Pvt. Ltd., remarked positively on the closer competition between the two major alliances. “It’s positive to see that both parties are striving for an equal footing. This approach will promote the creation of a fair and equitable environment for decision-making, where each party’s perspective and input are given due consideration, and unilateral imposition of authority is avoided,” Choudhary stated. This balanced competition, he believes, could foster a more inclusive and thoughtful policymaking process.
“As the MSME sector navigates through challenging times, our expectations from the new government are clear: streamline regulatory compliance, enhance access to affordable finance, promote digital transformation, and improve market access both domestically and internationally. Current challenges include high compliance costs, limited access to credit, lack of digital adoption, and infrastructure deficiencies,” he added.
Long-term Optimism Amid Short-term Volatility
Despite the initial market turbulence, some business leaders expressed long-term optimism. Jyoti Bhandari, Founder and CEO of Lovak Capital, remarked on the significance of the world’s largest democracy making a decision. “Hope the winning party continues to focus on economic growth and bringing out favorable policies for capital markets stakeholders,” Bhandari said, noting that a decisive win by a pro-business party can boost investor confidence and stimulate economic growth.
As the new government takes shape, the business community remains cautiously optimistic, watching closely for policy signals that will impact India’s economic landscape in the coming years.
(This story is based on election result trends upto 3:00 PM on 4th June, 2024).
