Market, elections & Budget: 100 days of next govt -- what to expect if BJP is re-elected

Mirae Asset Capital Markets in its latest note suggested what one can expect in the first 100 days if the incumbent BJP-led NDA alliance under PM Narendra Modi returns for a third term.  In the near term, Mirae Asset said all eyes will be on the July Budget to see if there are some changes in direct or indirect taxation, MSP policy, and MGNREGA payments. In he long-term, the focus would be on infrastructure development, farm laws, skill development, and creating employment on the manufacturing side to spur demand from rural India, Mirae Asset Capital Markets said.

"The BJP-NDA alliance came back to power with greater majority vs 2014 elections. If we connect the 2019 manifesto and the actions undertaken by the Modi government over the first 100 days, we find a lot of connections. In a nutshell, they not only “talked the talk” but also “walked the walk”," Mirae Asset Capital Markets said.

The fourth phase of voting for the Lok Sabha Elections 2024 is underway. A total of 96 Lok Sabha constituencies across nine states and one Union Territory will vote till 6 pm. More than 1700 candidates are contesting in the Phase 4 polls.

Mirae sees insurance sector reforms involving granting a composite insurance license to a single entity, which allows them to offer both life and non-life products. Countries like Singapore, Malaysia, and the UK allow such entities, it noted.

The Ayushman Bharat Yojana currently covers 100 million poor households. The BJP, in its 2024 manifesto, took a 'sankalp’ to include every individual above 70 under the scheme. 

"The current scheme provides insurance coverage of Rs 5 lakh per poor household every year. The coverage amount can be increased to Rs 10 lakh in the upcoming July budget. An additional outlay of INR 50 billion might be required for this," Mirae said.

Mirae sees a new interest subsidy scheme for affordable homes. It cited the interim Budget for FY25, where the government increased the allocation for the PM Awas Yojana to Rs 80,670 crore. 

"This was 48 per cen higher than the revised estimate of Rs 54,000 crore  spent in FY24. In the full year July budget, we can expect lower interest rates to further drive growth in the real estate sector," Mirae said.

Mirae expects an investment of roughly Rs 10-12 lakh crore in the next five years to equip Indian railways with modern, world-class facilities. This announcement, along with the Budget, can be expected. 

Notably, Rs 2.52 lakh crore was allocated in the FY25 interim Budget to build three major railway corridors to reduce congestion and logistic costs, Mirae noted.

Mirae said the proposed amendments to the Special Economic Zones (SEZ) has a goal to revive SEZs and facilitate business transactions between them and the domestic market. 

Industry experts, it said, are urging the government to give them permission to sell their products in the domestic market without paying the import duty that currently applies.

"With initial funding requirement of $1.2 billion, 10 new cities could be set up to expand manufacturing and help population decongestion," it said.

Mirae said that for Jan Vishwas 2.0, a bill was passed in August 2023 in the Rajya Sabha. The focus of the government will be on ease of doing business to attract FDI into the country. 

"According to Union Minister of Commerce and Industry, Jan Vishwas Act might need upgrades. We can expect announcement regarding it incorporating industry suggestions. According to media reports, deal negotiations have been on-going for last two years. A final announcement regarding it can be expected in the first 100 days. The focus of the government is to double its trade with UK by 2030," it said.

The brokerage feels the economic policies laid down by the Modi 2.0 government on Make in India, the focus on manufacturing (gaining a larger pie on the China+1 theme), the infrastructure push, the focus on green initiatives, etc. will continue. The policies, once announced, have a horizon of nearly 10 years for execution, it said.