India's recent general elections recorded one of the
most spectacular performances by any party in the past three
decades. Will this decisive victory bring stability to the market?
Our Indian Managing Director discusses the highlights of the
Led by Prime Minister-designate Mr. Narendra Modi, India's
incumbent ruling party Bhartiya Janta Party (BJP) has
single-handedly won the requisite majority to form the government,
meaning the next government will not be held hostage by a messy
coalition. It's been a very long time that the people of India
chose a single party to rule, giving the country enough stability
to last for the next five years and the ability to take decisive
The stock markets too have shown the faith with significant leap
in run up as well as on announcement of the results.
The BJP has committed to deliver good governance, and a contrast
to the decision and policy paralysis seen in last few years.
We have reason to be hopeful that India now presents a bright
and bullish arena to investors; the following highlights from
BJP's manifesto will help to settle any nerves that may
Characterising the taxation policy of the outgoing government as
"Tax Terrorism" and "Uncertain", which created
a negative outlook on the Indian economy and investment climate,
the BJP manifesto instead promises: tax certainty; a
non-adversarial and conducive tax environment; the adoption of a
GST by state governments; and a rationalisation and simplification
of the current tax regime. To that extent, substantial tax
amendments may be expected to make the tax environment simplified
and more predictable.
Barring the multi-brand retail sector, FDI will be allowed in
sectors wherever needed for job and asset creation, infrastructure
and acquisition of niche technology and specialised expertise. BJP
is committed to protecting the interest of small and medium
retailers, SMEs and those employed by them. The FIPB's (Foreign
Investment Promotion Board) functioning shall be made more
efficient and investor-friendly.
Corruption is a manifestation of poor governance. Moreover, it
reflects the bad intentions of those sitting in power. BJP will
establish a system which eliminates the scope for corruption
Technology enabled e-governance - minimising the discretion in
the citizen-government interface
System-based, policy-driven governance - making it
Rationalisation and simplification of the tax regime - which is
currently repulsive for honest tax payers
Simplification of the processes and procedures at all levels -
bestowing faith in the citizens, institutions and
The BJP manifesto seeks to focus on manufacturing, healthcare,
energy, infrastructure and so on, seeking to expedite the
development of freight corridors and industrial corridors, border
and coastal highways and encourage public-private partnerships. The
manifesto also sets to establish certain 'next generation'
infrastructure such as gas grids, nationwide optical fibre network
to enable wifi zones, modernised railways (bullet trains) and so
on. To that extent, concessions, incentives and optimum models for
private sector participation may be expected, which may attract
foreign investments in the currently languishing infrastructure
Employment and entrepreneurship
BJP will accord high priority to job creation and opportunities
for entrepreneurship and will:
Strategically develop high impact domains like labour-intensive
manufacturing (namely textile, footwear, electronics assembly,
etc.) and tourism
Strengthen the traditional employment bases of agriculture and
allied industries, and retail through modernisation as well as
stronger credit and market linkages
Harness the opportunities provided by the upgrading of
infrastructure and housing, for its job generating
Encourage and empower our youth for self-employment -
incubating entrepreneurship as well as facilitating credit
Address the employability issue by initiating a multi-skills
development programme in mission mode with focus on job creation
and entrepreneurship, in both rural and urban areas
Transform the Employment Exchanges into Career Centres -
connecting our youth with job opportunities in a transparent and
effective manner through the use of technology; as well as
providing counselling and training
With such a decisive majority, the new government should be able
to take the tough and pragmatic decisions which may be necessary in
the current scheme of things to restore lost investor
The short term looks very bright and bullish indeed for India.
The formation of the new cabinet of ministers and the first budget
in coming few days/weeks will further indicate shape of things to
come in mid and long term.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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