Big bang reforms may take backseat under Modi-led coalition government

Factor reforms like those related to land, agriculture, and labour are now off the table, it said. Privatisation and asset monetisation are also at risk, which could drag government capex in the short term.

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NEW DELHI: With the BJP’s tally remaining far below the majority mark on its own, the new coalition government may put the big bang reforms on the back burner. Experts say more populist measures would be taken by the new government which would give consumption sector a boost.

“The broad direction of the economy is unlikely to change, though factor market reform and privatisation are off the table... First, BJP will be dependent on regional allies like Telugu Desam and Janata Dal (secular) and make policy adjustments accordingly. Second, there will be greater demand to stimulate consumption in the economy from both BJP and its allies,” Emkay Global said in a note.

Factor reforms like those related to land, agriculture, and labour are now off the table, it said. Privatisation and asset monetisation are also at risk, which could drag government capex in the short term. As per Lekha S Chakraborty, economist and professor at the National Institute of Public Finance and Policy(NIPFP), there will be continuity with respect to the government’s focus on public infrastructure investment for supporting economic growth.

“Fiscal discipline will be given significance through fiscal consolidation measures to bring in the deficit at 4.5% of GDP. The continuity of economic reforms related to labour codes and taxation policies will face more deliberations to weed out differences in details,” she added.

As per Deepanshu Mohan, Professor of Economics at O.P. Jindal Global University, with a reasonable win for the NDA, despite it faring worse than 2014 and 2019, economic situation may continue to be marred with structural issues as the nature of its future political scenario may continue to surprise many.

Public infra investment

Factor reforms like those related to land, agriculture, and labour are now off the table, it said. Privatisation and asset monetisation are also at risk, which could drag government capex in the short term. As per Lekha S Chakraborty, economist and professor at the National Institute of Public Finance and Policy(NIPFP), there will be continuity with respect to the government’s focus on public infrastructure investment for supporting economic growth