Three Big Takeaways From Modi's 400+ Target

Market participants have largely discounted the probability of policy continuity with the return of the Modi government in 2024.

The latest in a series of flip by Bihar Chief Minister Nitish Kumar, who returned to the NDA fold, in a sense strengthened the post-assembly results perception in December that a third term for PM Modi is expected.

But what will this third term look like? The close-to-100-minute speech by Modi in parliament gives us some clues. Apart from the political commentary that was on expected lines, Modi set a target of 370 seats for the BJP in 2024 and 400 plus for the NDA alliance.

If we look at it in terms of a 'guidance' like many companies provide for future performance, this is a 22% increase for the BJP and a 13% jump from the 2019 tally for the NDA.

While the increase in tally, if this target is met, would be incremental in terms of the ability to govern, clues to what the agenda will be can be found elsewhere in the speech.

Here are the top three takeaways that hold clues to a third term for Modi:

The outlining of achievements in the first 10 years of the Modi government that the PM spoke out included the building of the Ram Mandir, the abolition of Article 370, and the removal of Triple Talaq.

All of these are stated goals that have survived decades of BJP manifestos. With these promises to the core voter base fulfilled, Modi's third term could focus sharply on developmental goals.

The preferred tool to spur economic growth post-Covid for the government has been an expansion of capex in infrastructure works. While the interim budget saw an 11% increase from last year's budgeted estimate figure, the focus of the PM's speech on roads, railways and other developmental works gives the message that infrastructure spending is likely to rebound in the July budget to be presented by the next government post-elections.

Another clear message from the speech is that the focus will continue on the GYAN constituency in a possible third term by the Modi Government. The acronym refers to a core voter consolidation, including G (Garib or poor), Y (yuva or youth), A (Annadata or farmer), and N (narishakti or women).

The push for social welfare bodes well if targeted efficiently at reviving consumption at the bottom of the pyramid. This will spur private capex, which investors want.