The BJP’s crushing loss in the Delhi Assembly Elections is expected to have an impact on the broader national economic policy. According to economists, the policy will now be more socially relevant – subsidies to the targeted, and job creation among others.

Whether reforms will be pursued with more vigour, the forthcoming Budget will show.

The stock market also saw extreme volatility on Tuesday before late buying pushed key indices upwards. One economist said that a similar mandate in West Bengal did not give desired results on economic front, but believed this would. It will also set a tone of more inclusive growth and socially relevant policies at national level, he said, adding that the Union Budget will focus on social issues more explicitly.

Another economist said that the Centre’s efforts would be to distribute subsidies to the targeted segments, besides rationalising them. Job creation is a high priority, and the Centre would try to ensure more strict and timely completion of the processes and projects. However, he did not rule out some more populism in Budget such as more tax benefits, especially on income tax.

Dinesh Thakkar, CMD of Angel Broking, felt that political competition was a good thing, because it would spur the Government to do more and faster, if they are to eventually consolidate their position in both houses of the parliament. “The fact is that the central government too has an amazing mandate and opportunity to deliver, and these short-term jolts can keep them on their toes to not take the mandate for granted,” he said.

Economic agenda He also said that in the budget, the Government has its task cut out – it needs to stick to the fiscal consolidation targets, but also smartly allocate higher spending to areas where it can have a stronger multiplier effect on growth. “I don’t think the Delhi election itself will change the goal posts for the Union Budget towards more populism, as the pro-economic agenda is what the government is committed to,” he said.

Rohit Gadia, Founder & CEO, CapitalVia Global Research also expects the latest poll result will not stall the reforms. “It’s good to have AAP on the winning side in Delhi as for this will act as a counter mechanism; AAP in Delhi and BJP at centre will help drive reforms. Both the parties will try to prove themselves,” he said.

On markets, both Thakkar and Gadia do not see much impact. They feel the short-term negative sentiment is already factored in. Taking it further, Gadia said, “The market has already corrected around 8 per cent as the news has already been discounted. So we won’t see any significant correction, market will continue to be volatile and likely to remain in consolidation phase for the next few trading sessions.”

comment COMMENT NOW