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Published: June 6, 2024
Updated: June 6, 2024

Modi 3.0: Economic Reforms and Market Impact Under the New Administration Upcoming Legislative Agenda

As Prime Minister Narendra Modi prepares to be sworn in for his third term on June 9, the new NDA government faces an extensive legislative agenda. Several critical economic bills are already in the pipeline, awaiting deliberation in the coming months. These include significant amendments to the Insolvency and Bankruptcy Code and the Companies Act. Reforms in the insurance sector are also on the docket, with pending amendments to the Insurance Act of 1938 and the Insurance Regulatory and Development Authority Act of 1999.

Focus on Digital Competition and Excise Law

The Ministry of Corporate Affairs is working on a draft Digital Competition Bill, which is expected to undergo further consultations. Additionally, the Central Board of Indirect Taxes and Customs has invited suggestions on the draft Central Excise Bill, 2024. This proposed legislation aims to modernize the central excise law, promoting ease of business and eliminating outdated provisions.

Influence of Coalition Politics

The formation of the BJP-led NDA government, supported by allies such as the TDP and JD(U), introduces new dynamics. Sources indicate that the previously prepared 100-day agenda may be adjusted to incorporate feedback from these allies. This could result in shifts in priorities based on the collective focus areas of the new coalition.

Market and Policy Outlook

Despite the narrower majority achieved in the recent elections, most experts and brokerages believe the NDA government will maintain its broad policy stance. Fitch Ratings suggests that while the NDA is expected to continue its infrastructure capital expenditure, business environment improvements, and gradual fiscal consolidation, the coalition politics and weakened mandate could pose challenges in passing more ambitious reforms.

Economic and Market Implications

The continuation of the NDA's economic policies is anticipated to provide stability and predictability for markets. Key areas such as infrastructure development and business environment enhancement are likely to remain in focus, supporting investor confidence. However, the intricacies of coalition politics could slow the legislative process for more substantial reforms.

As the new government takes shape, the legislative and economic agenda will evolve to reflect the priorities of the broader coalition. While the NDA's commitment to economic reform and market stability is expected to persist, the extent and speed of these reforms will be influenced by the coalition dynamics and the government's ability to navigate the legislative landscape. Investors and stakeholders will be keenly observing the developments and their implications for India's economic trajectory.