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Vote for Growth - ABSLMF Blog

The Vote for Growth

May 31, 2019
5 mins | Views 9868

The General Election in India has just concluded. Even as India remains a good long-term story, a stable government at the centre can have positive implications for the Indian economy in the near-to-medium term as well. Policy continuity, faster execution, and fiscal consolidation can be expected over the next 5 years.

  • The policy focus going forward is expected to be on increasing rural income, inclusive growth, and creating growth opportunities for all.

  • Resolution of stalled or under-utilized power projects which were delayed could get revived soon which could be positive for capital goods sector.

  • Given the global slowdown, FDI/FII flows within the EM markets could move towards India which provides better growth opportunity with a stable and decisive government.

  • Travel & tourism, health, and education are also expected to see increased focus.

  • Continued push on increasing efficiency and ease of doing business, implementing tax reforms, and GST rationalisation is expected. As the GST net widens to cover more items and more businesses, it will help the shift from unorganized to organized sector while also helping the fiscal maths through higher indirect tax collections.

  • The government can also be expected to continue its investment in Infrastructure to revive growth. Projects like Bharatmala, Inland waterways, Direct Freight Corridor, Metro Connectivity, and Coastal road are in the right direction.

  • Real Estate sector could see some reforms as there is requirement for affordable housing. This sector drives ancillary sectors like cement and is a big job creator.

  • Import Substitution through ‘Make in India’ has been a key focus of the government that can accelerate growth. A plethora of schemes like MUDRA have been launched to boost SMEs and entrepreneurship. Even the push towards electric vehicles is to reduce dependence upon imported crude.

Sectors that are expected to be in focus include Financials, Infrastructure, Consumption & Chemicals. We can expect a clear policy direction from central government along the above lines, which would guide capital allocation and investment decisions over the medium term.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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