Political economy to centre around elections forcing "wait and watch" by biz: ASSOCHAM

Whatever the outcome of Karnataka elections, the political-economic narrative of 2018 and early part of 2019 would centre around either the impending polls in states like Madhya Pradesh and Rajasthan or the general Lok Sabha elections, forcing investors to adopt a ''wait and watch'' stance although sectors focussed on rural consumption and health are likely to receive increased opportunities, an ASSOCHAM note has said.

"There is a lot of anxiety around the high stake Karnataka outcome, as that is perceived to be setting a tone for the political situation that would unfold thereafter. To that extent, the interest of the business and industry along with investors in the financial market is as high as rest of the segments of the society," the chamber said in an internal note to the stakeholders.

The chamber Secretary General Mr D.S. Rawat said, ''While there would be higher level of volatility in the financial markets as we further get into the election mode, the trend towards resolution of non-performing assets through the Insolvency and Bankruptcy Code would continue along with the focus of the government towards completion of the key infrastructure projects including highways and other roads."

The roll out of Aayushman Bharat, the national health scheme that has medical insurance at its core, would gather traction. "It is a flagship programme of the Prime Minister Narendra Modi and the roll out is expected to be big enough, providing a huge opportunities to the health insurance service providers, as also those in the healthcare sector," the chamber's note said.

It said, just like the previous governments, the focus would also be more on the farm sector by this government as well, especially in the election year. "With Monsoon expected to be normal and the government push likely in the next few months, the firms in the seeds, agri implements, including tractors, fertiliser, pesticides, dairy products and irrigation equipment would get a lot more business opportunities than in the previous few years".

However, the chamber noted concerns arising from the macro picture emerging out of the global factors like rising crude oil prices, facing increased pressure after the US President Mr Donald Trump pulling out of the nuclear deal with Iran. "The geo-political situation in the Middle East is key to the crude prices as also the financial markets. With dollar rising , India's total import bill in dollar terms would exert pressure on the country's current account position as well," the ASSOCHAM note said.

The run up to the general elections, after the noisy campaigning for the states, may divert government attention from any big time announcements, but the country's political economy has become robust enough to withstand some temporary disruptions, if any, the chamber noted.

Powered by Capital Market - Live News