Nomura, HSBC optimistic about BJP's win in Lok Sabha elections, call for reforms to boost growth

The general election for 543 Lok Sabha seats is in seven phases starting from April 19.

Multinational banks Nomura and HSBC have said the ongoing Lok Sabha elections point to continuity at the Centre even as they called for tougher reforms to spur growth.

In a research report, Nomura analysts Sonal Varma and Aurodeep Nandi said opinion polls were pointing towards continuity after elections, which also suggested same policies would continue, a Times of India report has said.

The Nomura analysts said the government could consider land, capital and judicial reforms as well as simplifying direct and indirect tax administration. It could also look at bringing electricity, oil & gas, and alcohol under the goods and services tax (GST) regime.

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HSBC economist Pranjul Bhandari suggested that BJP’s tally might increase from 303 in 2019 to 323 seats this time, with its National Democratic Alliance (NDA) coalition reaching 377.

Implementing easy-to-moderate reforms can deliver 6.5 percent growth over the medium term and for over 7.5 percent, moderate-to-hard reforms would be needed, Bhandari said.

Moneycontrol couldn’t verify the report independently.

The report said HSBC's note categorised infra, facilitating business in electronics and EVs and privatising some PSUs as easy reforms. Moderate reforms involved improving local government funding, simplifying tax systems and upgrading infra financing models. Subsidies, land and labour reforms and modernising health as well as education sector have been categorised as difficult.

The Modi government in the last 10 has undertaken significant reforms like demonetisation, introduction of GST, rollout of the Unified Payment Interface (UPI) and Make in India initiative among others.

The report comes ahead of the third phase of voting scheduled for May 7. The polling for the 18th Lok Sabha has been spread over seven phases and will conclude on June 1. The counting of votes will be held on June 4.