Stock Market Today Highlights: BSE Sensex, Nifty50 close 3% as bulls stroll back on Dalal Street; all eyes on Modi-led NDA’s next steps

12:16 (IST), Jun 5

Stock Market Today Live Updates: How New Government Will Face Key Policy Issues

Geopolitical uncertainties and the global economic situation may require acceleration of reforms. But with a coalition govt at the Centre, it may not be easy as some issues, such as privatisation and a relook at GST, need consensus. TOI lists top areas of focus:

GST revamp: Five-slab GST rate structure may not be reviewed immediately as it may require merging the 12% and 18% slabs, necessitating an increase in levies on goods and services that move into the higher bracket. That’s an issue on which political consensus may not be easy.

Public Finances: Privatisation is likely to be put on a back-burner for some time. While RBI’s mega dividend of Rs 2.1L crore and robust GST revenues will keep Centre’s finances in good shape, the Centre may have to go slow on cleaning up the subsidy regime further, although greater use of technology to plug leakages is something that won’t change.

Investment push: After hitting a high of $85 billion in 2021-22, the annual inflow of foreign direct investments has fallen for two consecutive years, touching $71 billion in 2023-24. Govt is expected to make the investment regime more attractive in several sectors, including electric vehicles and artificial intelligence.

Food prices: Although overall inflation has moderated (see chart below), food prices remain both volatile and high. Govt may take steps to weatherproof prices and shield it from climate-induced shocks such as heatwaves and floods.

Agriculture: The latest GDP data indicates a relative stagnation in the farm sector. Reforms focusing on irrigation and use of Al to raise productivity are expected. Election results point to the challenging but imminent need to raise farmers’ income.

Exports & PLI: The production-linked incentive (PLI) scheme has helped push exports of smartphones and other products but there have been demands to extend it to more sectors, such as toys and footwear. Expect fine-tuning of PLI to focus more sharply on companies and sectors willing to shift out of China for export production.

Regulatory clarity: Before the poll dates were announced, several new economic legislations were in the works. A better regulation of cryptocurrencies, Al, data protection is under consideration.

Maintaining growth: Most economists do not expect 2024-25 GDP growth to be a repeat of 8.2% growth in 2023-24. But ensuring a growth rate of even 7% in the current global economic environment won’t be easy. Among the steps expected are a road map for energy transition and a push for infra investments. Economic ministries have made action plans with specific targets for 2030 and 2047. A ministry-wise action plan could be unveiled, if there is a consensus in the new govt.