Corporate leaders in India are hoping that the decisive election win by Narendra Modi’s Bharatiya Janata Party will help the new government increase the pace of economic reforms.
Sales have been falling for a range of products such as cars, two-wheelers, air travel, and consumer goods, with volumes dropping to multi-quarter lows.
The incoming administration has reportedly made plans to kickstart private investment and stimulate demand in the run-up to presenting a full budget in July, the Economic Times has said.
Passenger car volumes have dropped in nine of the past 10 months, while sales of motorbikes fell 17% in the 2018-19 financial year. Sales of two-wheelers in the 2018-19 fiscal year stood at 1.4 million units, compared to 1.7 million in 2017-18.
Volume growth at leading companies selling fast-moving consumer goods that derive more than a third of sales from rural areas has dropped to a six-seven-quarter low.
Meanwhile, domestic air travel, which has enjoyed continuous growth for six years, hit a negative patch in April when the number of flyers fell by 4.5%.
The new government’s first challenge will be to revive demand and the forthcoming budget may cut personal taxes to put more money in the hands of the middle class, to boost public spending.
The draft of a new industrial policy is ready for rollout. The government is expected to take measures to boost public investment in infrastructure as private sector investment may take time to kick in.
The United Nations has lowered its forecast for gross domestic product (GDP) growth for the 2020 fiscal year from 7.5% to 7.1%. In its report, the UN said India was, like the rest of the world, suffering a broad-based economic slowdown, with lower consumption, industrial production and exports.
Corporate leaders said a stable national government should boost infrastructure and help it to boost employment and address agricultural distress.
RC Bhargava, chairman of leading car maker Maruti Suzuki, hoped that the new government would continue restructuring the Indian economy, as well as the governance structure, and lead the country on a path to high sustained growth.
Sunil Bharti Mittal, chairman of the Bharti Airtel telecom conglomerate, also expressed hope that a strong government would be well-placed to push reforms and boost investor confidence.
Nestle India chairman Suresh Narayanan felt the new government should focus on rural areas in its bid to revive growth.