Published on 24/05/2019 11:52:33 AM | Source: ICICI Securities Ltd

Lok Sabha Elections 2019 - ICICI Securities

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Stability in regime = Consistent economic governance

With the completion (major leads/wins out) of the 17th General Elections and re-election of the incumbent government, the key positive takeaway is consistency in economic governance framework for the next five years. Most importantly, comfortable majority also ensures no impediments of coalition pressures in case of tough decisions for long term growth. The attention, therefore, shifts to areas of focus for the next five years, which can be gauged through the manifesto of the BJP. The broader takeaway is that manifesto envisages inclusive growth spanning infrastructure, rural/agri population, industries and basic necessities such as housing and healthcare which could be a catalyst for a decade of robust economic growth ahead.


Target to make India third largest economy by 2030

We now dissect the manifesto of BJP to ascertain the framework for economic governance ahead and key areas of focus sector wise. It is pertinent to note that the manifesto was anchored with the aspiration to make India the third largest economy of the world by 2030 and committing to make India a US$5 trillion economy by 2025 and US$10 trillion economy by 2032. This implies real GDP growth target of ~7% CAGR over the next seven years and ~8%, thereafter for the next seven years. The targeted capital investment for the same is envisaged at a massive Rs 100 lakh crore in the infrastructure sector.


Anchoring growth through inclusive focus on all areas

Overall growth targets have been anchored on areas such as agriculture (doubling of farm income by 2022), Infrastructure (focus on Railway, road & air connectivity), housing (pucca housing for every family by 2022), manufacturing (Industrial Policy, Ease of Doing business, MSME boost) and healthcare (building infrastructure and improving accessibility). The abovementioned intents throw up a huge opportunity across sectors like infrastructure, capital goods, cement, healthcare, agri product as well as major pockets of consumption, going ahead. We outline the announcements in the manifesto and the consequent impact on the respective sectors (Page 2 onwards) to gauge the area of focus/opportunity.


Execution to herald strong decade of growth ahead

To encapsulate, the announcements in the manifesto, if executed as intended, could herald a next decade of strong economic growth ahead. This would also translate into a massive opportunity for businesses across the segments mentioned above. We continue to remain constructive on Indian equities and believe the domestic macroeconomic setup is ripe for capital efficient businesses to create value over the next decade.


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