Nifty99000 100%

Sensex99000 100%


Job creation to top agenda of new govt

Author: Rajiv Singh/Wednesday, May 22, 2019/Categories: Exclusive

Rate this article:
Job creation to top agenda of new govt

With most exit polls suggesting a thumping victory for the BJP in the general elections to the Lok Sabha, there are talks of Narendra Modi returning to power for a second term as Prime Minister. Under this situation, here’s a look at the hurdles that the current government faced during its 5-year stint and the areas which it should focus on in the next term.  

After winning a clear mandate in 2014, the Narendra Modi-led NDA government had taken a lot of dynamic steps like demonetisation, implementation of Goods and Services Tax (GST), financial inclusion and direct benefit transfer, and tackling bad debts through the Insolvency and Bankruptcy Code. These have had a positive impact on the economy, bringing most of the population under the banking ambit and plugging leakages.

The current government also made tremendous efforts to keep inflation under control. Record food production over last few years helped keep prices at bay.

However, the government has been criticised on issues of fresh creation of employment and tackling farm distress. The strong infrastructure pick-up and capital expenditure growth witnessed in the first two years of the Modi regime lost its momentum during the second half. The government has taken a lot of measures to boost growth and employment through flagship programs like MUDRA loans, MGNREGA, Pradhan Mantri Kaushal Vikas Yojana, but their implementation and reach have been questioned. When the current government came to power, it promised to modify labour reforms but failed to do so. However, measures like ‘ease of doing business’ and making states competitive have improved the business climate in India.

In the political manifesto before the general elections, most major parties announced populist measures which are likely to create more stress on the exchequer if implemented. The central government missing the FY 2019 tax revenue target by over 1 lakh crore and the fiscal deficit rising above 3.4 per cent of the GDP are major warning signs of fiscal stress.

Declining auto sales, reduced consumer goods consumption and major companies’ fears of recession in semi-urban and rural economies also call for urgent action.

With lessons learnt from the past five years, the new government may focus more on these key issues before taking bold steps.

Apart from farm loan waivers and implementation of MGNREGA, steps like providing irrigation and storage facility, promotion of agriculture exports, streamlining and implementation of MSP have to be taken by the new government for the betterment of rural economy and to increase GDP from agriculture.

Irrespective of which party forms the government at the Centre, the new government is expected to take proactive and strong steps to encourage private sector investment. However, to do that the new government would have to tackle the current liquidity crisis in the system and establish a stable credit creation regime.

The government may create a structure to allow free flow of capital and talent with low or no taxes. Even the regulatory compliance laws and policies are likely to be changed for the growth of start-ups and MSMEs. The new government may also take steps towards privatisation of banks, improving the rankings in case of ‘ease of doing business’, implementation of Land Acquisition Bill and labour reforms.

From an investment perspective, India is likely to retain the tag of the fastest growing long term economy in the world and therefore volatile moves in the markets should be used as an opportunity to accumulate long term wealth.

The author is CEO of Karvy Stock Broking


Number of views (3374)/Comments (0)

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free