Prime Minister Narendra Modi swept to a massive triumph in the general elections 2019 on Thursday, stunning opponents and upsetting predictions of a fractured mandate, giving his National Democratic Alliance (NDA) an unassailable lead of 341 seats — well above the halfway mark in Lok Sabha — and on course to increase his majority in 2014.
What does his victory mean for the economy? CNBC-TV18 spoke to Kiran Mazumdar Shaw, CMD of Biocon; Sumant Sinha, CMD of ReNew Power; Sanjay Nayar, CEO of KKR India; Pawan Goenka, MD of Mahindra and Mahindra (M&M); Vikram Kirloskar, President of CII and Harsh Mariwala, Chairman of Marico to get their perspective on the same.
“First and foremost absolutely a fantastic victory for the Modi government. This is a huge pro-incumbency victory, which basically tells you that people want economic stability for the country. I don’t think the opposition were able to project themselves as a serious contender to provide economic development for the country. I think this is a very important outcome of the elections, which now allows the Modi government to build on the five-years track plan that it developed in its first term. Now, it is about the implementation and execution of this track plan. A number of good initiatives have been started in the first term and now it is about really building and executing on them,” Shaw said on Thursday.
Sanjay Nayar, CEO of KKR India, said, "This is a resounding victory and I would say this is music to ears of foreign investors because you have continuity, that is the most critical thing. In the short run they will have to tackle both the things simultaneously, one is the liquidity issue in the banking system and in the NBFC system and making sure that some of the reforms they have started continue absolutely untouched and may be at a faster pace now that they are politically probably going to be a little less sensitive which is a good way means that we should make sure that bankruptcy processes get bedded down and clean-up of the banking sector continues, that’s the short term, that has got to happen right away. On the same day, you have to start thinking about the longer-term reforms."
“If I look back at the reforms in the first phase of the government, they were more skewed towards welfare compared to the economic reforms. Now the time has come where we need to give fillip to the economy by taking some tough reforms, land reforms, labour reforms, things like GMO for agriculture which will improve productivity, supply chain reforms in farming area, privatisation, things like farm income above a certain level bating tax, judicial reforms, simplifying direct taxes, reducing corporate rates. These are the tax reforms which the government has not undertaken,” Mariwala said.
According to Sinha, there has to be a massive recapitalisation of the public sector banking system. “So far what you have seen is recapitalisation but in small measures and never enough to get confidence back within the PSU banks and so even though they account for 70 percent of deposits they are actually accounting for very little of actual lending right now.” He further mentioned.
“It is a resounding victor and perhaps even the most optimistic BJP supporters may not have thought they will get such a large verdict from the citizens of the country. There are two things that I would like to table in addition to what has been said infrastructure, agriculture, reforms, labour, GST, all of that has been said. I think one of the initiatives of the previous government that somewhat got overshadowed by the other priorities of the last government was Make in India and I believe we need to see more thrust on that and there are various things that need to be done. Ease of doing business, which was the last focus is not going to be enough to see manufacturing get to the level where the government wanted it to, where we all wanted it to be. I think the biggest concern in the long-term that the government should have is job creation and in some sense job creation and Make in India go hand in hand. Obviously, there is no overnight magic wand that one can have for both but what has to happen immediately, in first 30-60 days is get consumption going. We have been in a kind of pause mode for the last several months and almost every industry is slowing down, suffering because of this pause that has happened because of elections and I hope by immediate actions of the government, the consumption cycle will start going up. So, if you put all these things together and what has been talked about, clearly there is lot for the government to do. The verdict while it is good for the government, it also spells out the expectation that the nation has from the continuity of the government. I am sure lot of planning has been done in last 2-3 months on what will be the immediate big bang announcements, reforms that will come up that will start moving us in the right direction,” said Goenka.
CII president Kirloskar said, “I will just like to congratulate the BJP, the leadership in the BJP, Narendra Modi for the most fantastic victory. There is a lot which has happened on the ground which perhaps was not talked about during the election process and that is why people have voted for him. It is not that things are not happening, a lot of the schemes, a lot of the work like Swachh Bharat have really worked. What could I like to see going forward - of course there are lot of the issues in which we need to untie the shoelaces to make things move fast, things like the issue of GST, different taxes and such things.”