India Inc cheers continuity at the Centre, but rues fragility

Indian industry honchos said the continuity of the NDA-BJP government at the Centre would ensure resilience in the economy and grow despite the unexpected outcome in terms of an absolute majority at the Centre.

However, they cautioned about horse-trading among political allies and the vulnerability of the government to push through policy changes without the total consensus among ideologically diverse parties.

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“Government stability and continuity are what we were looking at, which we believe will continue. However, with a stronger opposition and balance of power, economic policies could get a boost and the focus could shift from infrastructure development to consumption, more welfare schemes, higher MGNREGA allocation and direct boost to the rural sector,” said Mohit Malhotra, chief executive, Dabur India.

Terming the results as quite unexpected but a reality check, Arup Chauhan, executive director, Parle Products, said, “The result is what people have sought and the general mood will get better influencing the propensity to spend. Consumption and demand must go up in any case.”

“Stability at the Centre is most important for driving reforms. With a clear majority, reforms become a breeze which may encounter multiple hurdles, now with expected horse trading of alliances which could further weaken positions,” Chauhan added.

Brokerage houses said they expect policy continuity, but the BJP falling short of an outright majority could mean passing contentious reforms may be more difficult. Harsh Goenka, chairman, RPG Group, said, “We expect the government's growth agenda for the economy to continue with the same agility as before. I am sure there will be some soul-searching within with an emphasis on carrying the poorer along and creation of jobs.”

“Despite the slimmer majority, we do expect broad policy continuity to persist, with the government retaining its focus on its capex push, ease of doing business measures and gradual fiscal consolidation,” said Jeremy Zook, primary sovereign analyst for India, Fitch Ratings. Zook said he expected India’s strong medium-term growth outlook to remain intact, underpinned by the government's capex drive and improved corporate and bank balance sheets.

Shekhar Bajaj, chairman of Bajaj Electricals, said, “It is always good for any country to have a strong opposition to flourish. Consensus building is important. India's growth depends on demand and consumption and will continue to grow at 6-7% irrespective of any political party at the Centre.”

“The new government is likely to be more consumption focused than earlier, when it was more capex and infra focused,” said Abneesh Roy, executive director at Nuvama Institutional Equities. “A likely good monsoon, pricing growth returning for consumer companies in FY25 which was negative in FY24, would be other plays,” he said. “Political stability is a significant factor contributing to increase in consumption across sectors,” said Varun Berry, MD of Britannia Industries.