Change is indeed sweeping the country. For the first time since 1989 a single party or any alliance (pre-poll) for that matter have gained absolute majority in the Parliament. With NDA emerging as a single largest party, a few post poll alliances would mean the ruling coalition would have near two third majority in the lower house required to pass the most critical bills including Constitutional Amendments.
Change is evident in the accuracy of opinion/exit polls too despite their failure in the last four occasions. Not only they got the trend right but the agency that gave the maximum seats to NDA came closer to the poll numbers.
Should we just call it the end of coalition as well as opposition era too. Apparently the rule book suggests that in order to be recognized as official ‘Opposition’ in the House, a party would need to secure at least one-tenth of the total seats in the House. Congress with just 47 seats may lose the status of official opposition too. This is another aspect of change in the current election.
The preconditions provide an ideal ground for Modi’s stewardship to lead the country out of the current state of the economy. To be sure he has his jobs cut out. First would be settling down with a credible Ministry and Cabinet.
Second, would be to present a budget that stays on fiscal consolidation path and yet creates room for business confidence to revive and growth to be nudged upwards.
Third would be to take up the pending reforms including tax reforms (GST/DTC), energy pricing, SEB losses and setting the ground rules for mining, land, labour and environment. He can then move on to take up more medium to long term development agenda already in the radar including modernization and expansion of the transport network, industrial regions and manufacturing revival, urbanization and most critically agriculture.
In my view this is the best time to invest in equities for medium to long term. A portfolio mix of growth and cyclical stocks would yield far bigger returns than debt or for that matter any other asset class.
