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How the Indian Economy Will Perform after the Election?

The biggest democracy of the world is due to end its election process, with the Narendra Modi’s Bharatiya Janata Party (BJP) projected to secure another victory. Latest polls suggest the party will manage to secure 267 seats in parliament, little below the 272 seats needed to form a government.

Biggest election in the world

When we look at the numbers, it is impressive to see that India is a democratic country. The time taken for polling is 39 days, there 1 million polling stations, 900 million eligible voters, 83 million new voters since the last 2014 election, and 15 million people aged 18-19 years old eligible to vote.

As it had been covered on the FINQ video news, many see this election as a referendum for PM Modi, considering that the latest economic picture deteriorated.

GDP growth cools down

According to the latest information available on, India’s GDP as a % change from a year ago, weakened to 6.6% in the last quarter of 2018, down from 7.1% in the third quarter. The economy continued to weaken for three quarters in a row, after topping in the second quarter of 2018.

The latest industrial production figures are also not encouraging, considering that in March 2019 figures pointed to a 0.1 contraction. February numbers were also weak, showing a modest 0.1% increase. The indicator peaked out in October a figure above 8% and it nosedived ever since, as the global geopolitical and economic picture begun to deteriorate.

India had also been stuck in a conflict with Pakistan and although the economic impact had been muted up until now, an escalation of tensions could begin to affect negatively an already weakening economy.

Probably one of the biggest geopolitical concerns has to do with the latest escalation of conflict between the United States and China. Several weeks ago, the US President Donald Trump increased tariffs on $200 billion worth of imports from China to 25%, igniting fears that the struggle for power between the two economic giants will hurt the future of global economic growth.

Although India has a close relationship with the US and China, the economic impact of a full-blown trade war will be felt at a global scale. The prospects for a pick up in the Indian economy are low until geopolitical tensions will start to ease and confidence will be reestablished.