Lok Sabha election outcome won’t impact economic policy, says Raghuram Rajan
The former Reserve Bank of India (RBI) Governor Raghuram Rajan said that the outcome of the Lok Sabha elections will not have an impact on the nation’s economic policies.
He said that the economic policy direction is likely to remain steady whether Prime Minister Narendra Modi secures a third term or not.
In an interview with Bloomberg TV’s David Ingles, Raghuram Rajan said, “There is a lot of continuity built into Indian policy. Whatever government comes in will take a lot of the good stuff that has been done and continue it.”
Rajan, presently a finance professor at the University of Chicago Booth School of Business, shared his insights during the UBS Asian Investment Conference in Hong Kong.
He highlighted that the upcoming government, upon assuming power, would announce a budget focusing on continuing existing favourable policies while considering necessary adjustments.
“All the good stuff that is happening while trying to see what other changes have to be made,” he said, talking about the Union Budget that will be presented soon after the new government assumes power.
The final phase of the six-week-long Lok Sabha elections will start on June 1, with results to be announced on June 4.
There is widespread expectation that PM Modi’s Bharatiya Janata Party (BJP) will secure a return to office, although the extent of its majority remains uncertain.
Financial markets are closely monitoring the situation, with concerns over potential repercussions, including a market downturn, should the BJP face setbacks.
Reflecting on the Modi government’s infrastructure spending, Rajan said that it was a necessity given the country’s huge infrastructure gaps.
He mentioned the importance of ensuring that infrastructure investments benefit not only major industrial players but also contribute to the broader development of society.
According to estimates by Bloomberg Economics, the upcoming government is expected to allocate Rs 44.4 lakh crore ($534 billion) towards new infrastructure projects between 2024 and 2026.
Such investments are projected to fuel economic growth, potentially reaching 9% by 2030, indicating a positive outlook for India’s economic trajectory in the coming years.