India’s western part state Gujarat election gives the way of coming general election in 2019. Because Not only India but also many foreign institutions watching this election closely. Foreign investors making research on it they send their representatives to analyze the ground report of the election. It hopes that Modi’s charisma will carry on. If Modi wins, current administration will take more hard steps to economic reforms. If BJP loss in the election it would be biggest setback to economic reforms. And this setback can influence the other state elections too.
This election is important because BJP in power last two decades in Gujarat and BJP fighting this election of “reforms and development”. BJP using all arrows to win the election because in 2016 BJP lost the assembly election in Tamil Nadu, West Bengal and Kerala won only Assam but as we know Gujarat more crucial than Assam. This election purely fights on the bases on last 3 years reforms whatever decision has been taken were good or not. Opposition parties are very much confident that demonetization and GST would play the crucial role in the election. But it not seems that.
Recently, well known leading global financial services firm Morgan Stanley doing its research about India’s reform it describe that India is path on development. Digitizing cash economy and reforming its archaic tax system these reforms makes India fastest growing economy over the next 10 years.
BJP should not bother short term challenges and not under pressure opposition parties because digitize economy can increase 10% GDP compound annually. Anil Agarwal Research Head at Morgan Stanly says that “The reforms result could be a multi-trillion dollar opportunity” and can reach Indian economy $6 trillion by 2027 and equity market can jump 10th to 5th place.
Opposition were very much optimistic in Gujarat and Himachal Pradesh elections because one of the reason is Reserve Bank of India (RBI’s) November 2017 survey shows that only 45.2 % of people believe that economic conditions will improve a year ahead ,which is lowest percentage since Modi government came to power at the centre. It means economic condition of the nation is worsening or remains as it is till year end.
Opposition plays this card and confident about the victory and criticizes the GST, digitization, Jan Dhan and demonetization. But they don’t know these reforms will become the template for other emerging nations in future. And India can become the role model for the other developed nations. Morgan Stanley research has given the wonderful example that India’s digital transaction only 8% it is below other emerging markets such as Brazil 30%, South Africa 27%, and Russia 16% .Research expecting that till 2027 it will increase to about 20% of GDP which would digital transactions as a percentage about 36%. GST is short term pain but when system on track it will definitely boost to Indian government finances. India’s cash-based transactions to digital transactions whether through Credit cards, debit cards, or mobile wallets it would be bigger economic growth, these transactions would lead to easy business and removes hurdles in filling the taxes.
Jan Dhan creates revolution in the country because an estimated 35% of Indian households did not have a bank account. But now most of them have Bank account and Mobile phones make it easier for transactions. Morgan Stanley says that in India has around 800 million unique mobile users and about 430 have internet access. Ridham Desai Head of the Morgan Stanley in India says “we believe Internet access will double in the next 10 years and we estimate that 915 million Indians will be on the internet by 2026”. India moving cashless economy and increase the digital transactions in economy.
Nobody can deny that India is a long term growth story but Modi’s reform such GST, digitization, Jan Dhan and tax reform more strengthen the growth story of India.
The views expressed above belong to the author(s)