The state election victories for Prime Minister Modi’s BJP in both Gujarat and Himachal Pradesh ensure that the ruling party remains firmly on track to secure a majority in the Rajya Sabha (upper house of parliament) in the not-too-distant future. They should also provide some reassurance to the government that its popularity has not been dented by demonetisation and the implementation of the GST. In turn, that might make Mr Modi more inclined to pursue reforms in future. He has shown no inclination towards shaking up land acquisition or labour market policies, and isn’t likely to do so over the coming months as the general election in 2019 comes onto the horizon. However, we think that the BJP’s latest victories will open the door for other, less politically-contentious measures, including loosening restrictions on foreign direct investment and moves towards privatisation in various sectors of the economy.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services