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The BJP-led National Democratic Alliance (NDA) has emerged victorious in India\u2019s 2024 general election, but with a smaller majority compared to 2019. According to post-election analysis by Goldman Sachs, UBS, Bernstein and Citi, this slimmer mandate may push the government \u2013 known for transforming India into a global manufacturing powerhouse and making investments in sectors to reduce the country\u2019s reliance on Western nations \u2013 to embrace a more populist stance in its third term, prioritizing the demands of lower-income segments and rural development.<\/p>\n
The NDA\u2019s likely victory signals policy continuity for businesses and startups, with ongoing investment in infrastructure, digitization and manufacturing. The narrower margin, however, may prompt a reallocation of resources towards rural and welfare initiatives, potentially impacting some capital expenditure plans, the brokerage firms warned. (About $45 billion in value was wiped off the manufacturing giant Adani Group on Tuesday.)<\/p>\n
\u201cThe continuity of power may not fully translate into continuity of policies now, but we see less room for a large-scale tweak. This government has been characterised by more pro-market and less socialist policies. In a marked departure from the past, the revenue expenses have increased barely 11% over the last six years, while the capex has increased 24%,\u201d Bernstein wrote in a note.<\/p>\n
The BJP\u2019s assertive stance on digital sovereignty and its recent clashes with Big Tech are also likely to continue. In the last five years, the Narendra Modi government has enforced or proposed many laws \u2013 including a push to regulate internet apps, getting streaming services to review content for obscenity, and getting sued by WhatsApp for requiring the Meta app to break encryption \u2013 that have spooked large tech companies.\u00a0<\/p>\n
New Delhi has argued that it\u2019s seeking to protect the interest of its citizens through its proposals. <\/p>\n India, an ally of the U.S., is also increasingly attempting to build a tech stack to rival many popular, and usually, American offerings. Rupay is India\u2019s attempt to rival card networks Visa and Mastercard, whereas UPI, an interoperable and real-time payments system built by Indian banks, has already become omnipresent in India, processing more transactions than all card networks combined.<\/p>\n India has also quickly positioned itself as a global manufacturing hub in recent years, attracting companies including Apple, Samsung, and Google with lucrative incentives to shift more of their assembling needs to India. Goldman Sachs and Citi said that it is likely that India will continue to focus on manufacturing, but its fiscal allocation may be lower moving forward than expected.<\/p>\n India\u2019s benchmark indexes NIFTY and SENSEX ended Tuesday down 5.9% and 5.7% after it became clear that the exit poll\u2019s projections \u2013 that the BJP alone will get the majority seats \u2013 were not going to be accurate. <\/p>\n \u201cIn an extreme scenario, if the opposition [Congress and its allies] manages to wrest away the key allies, the investment approach to India would change materially,\u201d Bernstein noted.\u00a0<\/p>\n<\/div>\n