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Modi-led coalition's election win signals policy continuity in India — and spending cuts
India's National Democratic Alliance (NDA) has secured a victory in the 2024 general election, but with a smaller majority than in 2019. Post-election analysis by several financial firms indicates that this slimmer mandate may lead the government to adopt a more populist stance, prioritizing the demands of lower-income segments and rural development.
The likely victory of the NDA suggests policy continuity for businesses and startups, with continued investment in infrastructure, digitization, and manufacturing. However, the narrower margin could result in a reallocation of resources toward rural and welfare initiatives, potentially impacting some capital expenditure plans.
The ruling party's assertive stance on digital sovereignty and its recent conflicts with Big Tech are also expected to continue. The government has enforced or proposed several laws in the last five years that have unsettled large tech companies, with New Delhi arguing that it is seeking to protect the interests of its citizens.
India has also been working to build a tech stack to rival popular American offerings, such as RuPay, India's attempt to rival card networks Visa and Mastercard, and UPI, an interoperable and real-time payments system built by Indian banks. Additionally, India has positioned itself as a global manufacturing hub, attracting companies like Apple, Samsung, and Google with lucrative incentives.
While India is likely to continue focusing on manufacturing, financial firms predict that its fiscal allocation may be lower moving forward than expected. This could have implications for the country's economic policies and spending.
