Full majority, just majority, hung parliament: S&P Global Market Intelligence analyses scenarios and road ahead for India

Several sectors are considered strategic by the major political parties, including renewable energy, automotive, electronics, textiles, digital infrastructure, logistics, food production and services.

Economic growth, inflation, employment availability and foreign policy posturing are four factors influencing voter choices in India, the financial information and analytics firm asserted in its analysis. "Post-election economic momentum will remain strong while inflation is set to moderate despite lingering risks," it added.

Lok Sabha election for 543 seats, in seven different phases that started in April 19, would conclude on June 1, and the counting of votes is scheduled for June 4.

Prime Minister Narendra Modi is seeking a third term in office. The principal opposition party is the Congress party in coalition with the 27-party INDIA bloc.

S&P Global Market Intelligence's analysis was based on these three scenarios:

Scenario 1: PM Modi secures a third term, with the NDA securing a two-thirds majority.

Scenario 2: PM Modi secures a third term, with the NDA falling short of a special parliamentary majority.

Scenario 3: No party is able to secure majority seats by itself, needing to rely on coalition partners.

Assuming that PM Modi would return to office for a historic third term, S&P said the government will very likely continue efforts to position India as the leading representative for the "Global South" and to continue progress toward attaining "developed country" status, aiming to become a USD 30 trillion economy by 2047.

In full majority scenario for the BJP, it is expected that policies will focus on encouraging macroeconomic growth to keep India on track to become the third largest contributor to global GDP by 2030.

Fiscal prudence is expected to continue towards lowering the central government's fiscal deficit to 4.5 per cent of GDP by 2025-26 from 5.8 per cent of GDP in 2023-24.

Expanding the use of technology in government services, and across the private sector, is also very likely, according to the analysis.

"Proposed legislation to regulate the use of personal data and domestic digital infrastructure, and on the use of artificial intelligence (AI) systems, will therefore increase in both Modi-government scenarios," it said.

The next government will seek to consolidate foreign investments primarily via the central government.

Coming to the next scenario, PM Modi coming back to power with support from alliance partners, it argues that a weaker parliamentary mandate would imply more focus on social welfare programmes.

In such scenario too, it asserted that the government would seek to encourage foreign investments by providing incentives.

However, rather than the central government passing directives, it is of the view that a greater need for cooperation with state governments can be a possibility, in case BJP falls short of majority.

"Accordingly, competition among Indian states for marquee investment projects will increase, as is already occurring, with the Modi government likely exercising its central authority to guide the allocation of investment," it claimed.

As obvious as that, foreign policy outlook under Scenario 1 and 2 is expected to prioritize efforts to strengthen India's leadership of emerging economies.

The government is likely to focus on diversifying India's exports to improve its competitiveness. A new government may expedite trade agreements with emerging and advanced market economies, also seeking the inclusion of services and promoting use of India's digital infrastructure in those countries.

Target markets are very likely to include India's neighborhood countries, Middle East Gulf countries, and Asia-Pacific countries such as Australia, Japan, the Philippines, and Vietnam

Moving on to the Scenario 3, where it is assumed that no party is able to secure majority seats by itself and needing to rely on coalition partners, S&P Global Market Intelligence believes that a substantial cabinet reshuffle is almost certain, with portfolio allocation being distributed across coalition parties. "In addition to prolonged negotiations for government formation, the 100-day program under a minority government is very likely (to) focus on establishing a common minimum platform for priority policies, given the differing priorities of coalition members." Under this scenario, the role of state governments, irrespective of which party forms the state or central governments, is very likely to increase, the analysis noted. (ANI)