The results of the world’s largest general election were announced today after 6 weeks of voting, with around 900m registered voters casting their ballot across 543 constituencies. The incumbent Bharatiya Janata Party (BJP) won a majority of seats, which means that Modi will have another 5 years as Prime Minister. This is a significantly positive outcome for India as there will be continuity in governance for the country, as well as the continuation of further economic reforms.

It is worth noting that the BJP has won over 300 seats, more than the 282 seats they won in the 2014 general election, and the BJP has made inroads into several states that were previously strongholds for other parties (for example, West Bengal). BJP’s vote share has gone from 31% of the electorate in 2014 to over 41% in 2019 [1] – this is an unprecedented gain in vote share in India. We think this is a clear indication that the average man on the street has taken Modi’s reforms positively so far, despite massive disruption from big changes such as “demonetisation” (when 86% of cash by value was taken out of the system) and the introduction of a pan-India Goods & Services Tax (GST).

We believe that Modi’s government will continue to focus on good governance and will double down on reforms from here. It is evident that there is little opposition to the BJP at a state or central government level, which we think means that Modi will be able to fulfil a lot of the unfulfilled expectations from his last term. We expect the government to start implementing changes quickly from here, delivering on major structural changes to the land and labour laws, and also focusing on housing, infrastructure, and pulling people out of poverty.

While we expect India as a whole to benefit from these reforms, in particular we think companies relating to financial inclusion, middle class consumption and infrastructure will be positively impacted. Given that this government has been fiscally prudent and has stated its intention to remain so, we think that they could fund some of these reforms by selling off government-owned assets, so public sector companies could also stand to benefit: in particular public sector banks, where there is already talk of consolidation and sell-offs.