Since 2019, when Bharat became the 5th largest economy by GDP size nominally, surpassing the UK, France, Italy and Brazil, which was unthinkable just a decade back, Bharat and Bharat’s economy has been under focus, under the radar with Bharat’s leader at the centre of attention for his selfless work and Nation First approach. The reforms, the development, and the execution of the Promises made, left no reason, no doubt, and no question in the minds of Bharatiya voters, that the incumbent government would return to power and would return to power with a thumping majority.
The reform of the first term from Jan Dhan to demonetisation to GST to digitisation to DBT, to Make in India, to innumerable policies benefitting the last man standing, laid the foundation of a New, rapidly growing, swift action-oriented Bharat. The second term saw serious thrust on infrastructure creation with most modern bridges, roads, railway engines, to developing the lightest fighter plane in the world. For many, two years were lost in COVID, but it turned out to be a boon for Bharat, as people worked from home and efficiency jumped multifold, and many countries in the World realised who stands beside them when calamity or causality strikes.
From being the land of littered garbage bins, to snake charmers to corruption, the most Populace country emerged as the fastest-growing major economy, an export-oriented economy, with rising income levels and reduced poverty. With these under their belt, the NDA-led government took the elections by storm with Prime Minister Modi himself undertaking 200+ rallies in 75 days surpassing 145 rallies that he did in 2019.
Even on the 1st of June evening, when the marathon elections ended, the exit polls stated the absolute majority for the BJP with the NDA alliance forming the government with an expectation of 320 to 360 seats in a 543-seat National Assembly. On June 3, 2024, the markets, the indices, and the market participants discounted or presumed that PM Modi and BJP’s win was given with a clear majority and the result was Nifty, Sensex and Bank Nifty hit an all-time high crossing, 23000, 76000 and 50000 mark respectively.
The premise of this exuberance, excitement and enthusiasm, was that the policy of reforms and rationalisation of rules and laws would continue and thrust would remain on creating world-class infrastructure, through enhanced government spending and undeterred polestar being manufacturing to maximize job creation and ensuring inclusive Wellness of Mind, body and soul for every citizen of Bharat beyond Roti, Kapada and Makaan.
The Fateful day
On the June 4, when the election results came, it took everyone by surprise with the numbers of BJPs falling short of absolute majority and lowest amongst all three elections, creating a primary fear about whether Prime Minister Modi will even return to power. Will the allies of NDA support the Prime Minister to form the government and run it stably for the next 5 years?Most forgot that this is the third term of the same government with some bit of anti-incumbency and most got gripped on the anchoring effect of the Narrative of “400par”.
UPA in 2004, won 222 seats with INC winning 145 seats. UPA in 2009 won 261 seats and INC won 206 seats, a similar high for Congress and INC as was for the BJP and NDA. However, in 2014, UPA and INC were decimated with INC winning 44 seats only.
The result of high expectations from the incumbent government and no absolute majority by the BJP made the market Peak hit the turf. Sensex tumbled intraday 6200 points and finally settling with 4390 or 5.74 per cent. Similar was the case with Nifty and Bank Nifty, which plunged by 5.93 per cent and 7.4 per cent respectively.
PSUs were hit, most with a BSE PSU Index losing over 15.68 per cent in a single day, with most individual PSU stocks wiping 10 per cent -25 per cent of their market capitalisation. For quite a few stocks, there was a temporary freeze as PSUs hit the lower circuit. Investors lost ~ 31 lakh crores of networth on a single day.
The Future, the way forward, the next step
Amongst all the three terms, in Elections 2024, the BJP on a standalone basis got the least number of seats with BJP winning 282 in 2014, 303 in 2019 and mere 240 in 2024.
In other words, despite other parties being part of the alliance, National Democratic Alliance in 2014 and 2019, the BJP on a standalone basis could run the government with a free hand. Market participants got jitters thinking that the development agenda may shift to a populist bent with expanding fiscal deficit and shifting focus from government companies to private contractors.
The events unfolded quickly with the two largest alliance partners which helped the BJP secure majority in the Parliament with 293 seats, unequivocally supporting Mr. Modi and his able leadership. Telugu Desam Party contributed 16 seats, whilst Janta Dal United contributed 12 seats to the alliance, to give a fillip to NDA.
All the alliance partners beyond TDP, JDU and including NCP, and Shiv Sena have reposed their faith in the Prime Minister and Mr Modi is set to lead the country for the third term. The result of it, is that markets have recouped most of the losses and PSUs surging up from strength to strength.
Though markets have fully been resurrected, some questions remain unanswered-:
- How long will Janta Dal United continue to support the NDA keeping in mind that they have been opportunistic in their approach every now and then?
- Since 2002, the time, when Modi came into active politics and took reigns of the state of Gujarat, he has seen an absolute majority till 2024, what will happen on critical issues and reforms, that coalition
partners do not agree to? - The Way BJP experimented with fresh faces in MP, Chattisgarh and Rajasthan and changed the CM face in Haryana, with 2 places, it worked and in others, it didn’t. Will the change continue to be at work going forward as well?
- Maharashtra State elections are around the corner and two allies of the BJP in Maharashtra cornered eight seats, will this change on the fact if the BJP decides to go alone in Maharashtra state assembly elections
- Will the anticipated Sweeping Social reforms be part of the 100-day agenda for the first Modi-led coalition government?
Politics surely impacts Economics, as stability gives prowess to execution and continuity. But what works best is honesty, integrity and dedication even in politics, which one can surely learn from Vidur Niti and from the honourable Prime Minister.
