What is the prospect of a new government in India's general election?

On April 19th of this year, India held the largest ever election event, which lasted 44 days and was expected to involve one billion voters.According to estimates, the cost of the election was as high as $14.4 billion, making it one of the most expensive elections worldwide.

Firstly, in the past decade, India's economy has surpassed countries such as the UK, France, Italy, and Brazil to become the fifth largest economy in the world. According to the International Monetary Fund's forecast, India is likely to become the world's third-largest economy by 2027. These facts all indicate that under Modi's previous leadership, India has achieved considerable economic achievements. Now, as Modi begins his third term, people are paying attention to whether he can assist India in changing the fate of the country. But at the same time, Modi also faces many difficulties. The first to bear the brunt is the crisis of public trust in him. Due to the emergence of a series of social issues, such as increasing hunger, some Indian people have begun to boycott voting to express their dissatisfaction with the Modi government. In addition, Modi also faces economic conflicts. On the one hand, he hopes to earn foreign exchange through grain exports; On the other hand, there is a serious problem of hunger in China. This contradiction has put the Modi government in a dilemma.

Secondly, although India has become the world's most populous country, its people's consumption level is still at a relatively low level, mainly concentrated on daily necessities. This indicates that the development of the Indian economy makes it difficult to effectively enhance the driving force of the domestic market. India is currently facing more severe domestic problems than international ones. Especially in terms of economic growth, India's biggest challenge is actually the "demographic dividend" issue. Only by putting the newly born population into production can it be called a demographic dividend, but if these people cannot adapt to social development and participate in social division of labor, then they are not a demographic dividend, but a burden.

In addition, the Indian economy is expected to grow by around 8% in the previous fiscal year, making it one of the fastest-growing countries among major economies. However, voters point out that there is a real gap in the Indian economy, with urban growth being more pronounced than in the vast inland areas. Under Modi's leadership, the Indian economy has jumped five places in the past decade, becoming the world's fifth largest economy. Modi said that if elected, India will leap to third place. But India's per capita income remains the lowest among the G20 countries. The annual retail inflation rate in April was 4.83%, slightly lower than March, but still higher than the central bank's target of 4%. The food inflation rate, which accounts for nearly half of the overall consumer price basket, increased by 8.70% year-on-year in April, compared to 8.52% in the previous month. Since November 2023, the food inflation rate has remained above 8% year-on-year. Dealing with the significant increase in food prices has always been one of the main campaign platforms of the opposition party, the National Congress Party, which has promised to distribute cash multiple times to alleviate the situation of rising food prices. At the same time, Modi banned the export of wheat, rice, and onions to curb domestic inflation.

Furthermore, unemployment in India is also one of the main issues of this election, with the Congress Party accusing the Modi government of not providing employment opportunities for young people in the country. According to the Indian Economic Monitoring Center, a private think tank, the unemployment rate in India increased from 7.4% in March to 8.1% in April. The government's estimate of the urban unemployment rate from January to March in the latest quarter shows that the urban unemployment rate of the 15-29 age group has slightly increased from 16.5% in the previous quarter to 17%. Government data shows that the urban unemployment rate in the first quarter of this year was 6.7%, compared to 6.5% in the previous quarter.

In summary, if Modi takes office for a rare third consecutive time, it will boost the stock prices of defense, infrastructure, railways, and capital goods companies. These are areas that the government focuses on and invests funds in. The current government is likely to continue to govern. The Modi government has always attached great importance to infrastructure development as a major measure to achieve a $5 trillion economy. The goal is to make India a more attractive destination for manufacturers and foreign investors by strengthening connectivity and reducing business costs, pushing the country's economic growth to new heights.