Modi’s Election Victory Means Stable Policies and Spending Cuts in India


The BJP-led National Democratic Alliance (NDA) has won India’s 2024 general election, although with a reduced majority compared to 2019. According to post-election analysis by Goldman Sachs, UBS, Bernstein, and Citi, this narrower mandate may compel the government — known for turning India into a global manufacturing hub and reducing the country’s reliance on Western nations — to adopt a more populist approach in its third term, focusing on demands of lower-income groups and rural development.

The NDA’s anticipated victory suggests policy stability for businesses and startups, continuing investments in infrastructure, digitization, and manufacturing. However, the slimmer margin might lead to a shift in resources toward rural and welfare initiatives, potentially affecting some capital expenditure plans, warned the brokerage firms. (About $45 billion in value was wiped off the manufacturing giant Adani Group on Tuesday.)

“The 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 characterized 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%,” Bernstein noted in a report.

The BJP’s strong stance on digital sovereignty and its recent conflicts with Big Tech are also expected to persist. Over the past five years, the Narendra Modi government has implemented or proposed numerous laws, including regulations on internet apps, requirements for streaming services to review content for obscenity, and legal pressures on WhatsApp to break encryption. These measures have alarmed large tech companies.

New Delhi has argued that it aims to protect the interests of its citizens through these proposals.

The likely agenda of the next NDA government. Image and projection: Citi

India, a U.S. ally, is also increasingly trying to build a tech stack to rival many popular American offerings. Rupay is India’s attempt to compete with card networks Visa and Mastercard, while UPI, an interoperable and real-time payments system developed by Indian banks, has become ubiquitous in India, handling more transactions than all card networks combined.

India has also swiftly positioned itself as a global manufacturing hub in recent years, attracting companies like Apple, Samsung, and Google with lucrative incentives to relocate more of their assembly operations to India. Goldman Sachs and Citi suggest that India will likely continue emphasizing manufacturing, though its future fiscal allocation may be lower than expected.

India’s benchmark indexes NIFTY and SENSEX ended Tuesday down 5.9% and 5.7% respectively after it became evident that the exit poll’s projections — that the BJP alone would secure a majority of seats — were inaccurate.

“In an extreme scenario, if the opposition [Congress and its allies] manages to wrest away key allies, the investment approach to India would change significantly,” Bernstein noted.

Manish Singh
Manish Singh
Senior Reporter. Manish covers India’s startup scene and venture capital investments. He also reports on global tech firms’ India play. Previously, Singh wrote for about a dozen publications, including CNBC and VentureBeat. He graduated in Computer Science and Engineering in 2015.

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