THE IMPACT

2

Immense improvement in India's FY 2015 Gross Domestic Product (GDP) growth unlikely; despite the BJP-led NDA coalition in Lok Sabha elections...

Source Forecast Explanation

Citigroup India

• Citigroup India are optimistic, but they believe the path will be more gradual than sharp. Factoring in sub-par agri growth, they have retained their above consensus FY 2015 GDP estimate of 5.6 %

• While the new political formation is likely to set the wheel in motion immediately, effects on the economy will be lagged and a full-fledged recovery will be realized only in 2016-17

Deutsche Bank

• They forecast 5.5% real GDP growth for FY 2015, with potential of growth to be lower by 50 basis points if monsoon disappoints

• Growth would improve to 6 % in FY2016 on the back of improving investment and exports

Moody’s

• They expect GDP growth to continue to be below potential, at about 5% this year, and the possibility of a sub-par harvest due to El Nino effects poses downside risks

Morgan Stanley

• GDP will expand at a four-year high of 6.5 % in the year through March 2016 compared with a previous estimate of 6.2 %

3

Sector Policy Sentiment Impact

Infrastructure

• Projects are expected to be cleared on a fast track mode

• The four sectors with positive sentiments after the change in government are power, roads, ports and railway

• The state of policy paralysis and indecisiveness is not expected to continue for long once the Modi government is formed

Coal

• Prime Minister-elect Mr. Narendra Modi is exploring breaking up the state behemoth Coal India Ltd

• He further plans on opening up the sector to foreign investment to boost output and cut imports

• This is expected to reduce the red tape, strikes, protests against land acquisition and delays in obtaining environmental approvals which have otherwise kept coal output far below demand

• Investment cycle is expected to benefit in the sector as a result of the breaking up of the company

Manufacturing

• Implementation of the national manufacturing policy and prioritize indigenization of key sectors like defense, power and railways

• Provide a more business-friendly environment including openness to foreign direct investment and speedier decision-making

• Exporters in the engineering sector believe a strong and decisive BJP- NDA government to be led by Mr. Modi will be a big boost to India's manufacturing sector that is crucial for exports

• Significant improvement in the quality of governance, is expected to reduce transaction cost of Indian exporters and make them competitive in the world

A BJP-led government will take speedy decisions, focus on reviving economic growth, give priority to infrastructure and manufacturing, and protect the interest of farmers in land acquisition: Narendra Modi

4

Sector Policy Sentiment Impact

Power

• The Narendra Modi government is likely to harness solar power and give a boost to development of offshore wind energy so as to provide electricity to every household in the near future

• The new government is also expected to reinstate accelerated depreciation for investments into wind energy projects and accord priority sector lending for the entire renewable energy segment to give a boost to non-conventional energy resources

• This will lead to the expansion of clean power generation, especially solar and wind energy, as it has the potential to create jobs and supply power to millions of scattered households not connected to the grid

Automobile

• Indian automobile industry has pinned hopes on the new government to push reforms such as goods and services tax (GST) and policies that boost infrastructure development

• GST would make operations easier it would help the importers avoid double taxation

• This is also expected to help in creation of jobs, moving manufacturing to a much faster rate of growth and getting good governance in the country for the automobile sector

A BJP-led government will take speedy decisions, focus on reviving economic growth, give priority to infrastructure and manufacturing, and protect the interest of farmers in land acquisition: Narendra Modi

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