Reform agenda will be more inclusive if Modi-led govt comes to power again: Report

India's reform agenda will turn more inclusive and the initiatives already taken will be fine-tuned if the Narendra Modi-led NDA returns to power as indicated by exit polls, says a report.
According to the report by DBS Banking Group, as highlighted in the manifesto, infrastructure will remain a key area, continuing the strong performance by roads and transport sector, which has already fast-tracked many stalled and ongoing projects.

"Boosting rural growth will also be a priority through expanding the already announced PM-Kisan scheme but is unlikely to include a nationwide farm loan waiver," DBS Group Research Economist Radhika Rao pointed out in Tuesday's market report.

The goal of narrowing the fiscal deficit to 3 per cent of GDP for the centre continues to be delayed, with the February Interim Budget already making room for a small slippage in the fiscal goals.

An additional 10 basis points slippage in the fiscal deficit target might be on the cards at the full-year (June/July) Budget, but not diverging widely from the path of fiscal consolidation.

"Borrowings will remain high and remain a driving force for the bond markets," wrote Rao.

However, he cautioned that global catalysts, particularly oil prices and US-China trade dispute are unfavourable to India at this juncture.

"We expect the Indian rupee to weaken past 70 (to the US dollar) again considering global risks, gains on effective exchange rate terms and domestic drivers," said Rao.

The government would need to get fiscal consolidation back on track and rely on monetary policy to support growth.

The seven-phased general election closed on May 19. Exit polls predict a return of the ruling coalition – National Democratic Alliance (NDA) - for a second term led by Prime Minister Narendra Modi.