A dominant victory for India's ruling party in state elections gives legitimacy to prime minister Narendra Modi's economic reforms, says a fund manager.
Modi's Bharatiya Janata Party won 312 out of 403 seats in the election in Uttar Pradesh, seeming to confirm public confidence in his agenda.
“In my view this is a welcome sign of political stability from which India should benefit, as it shows the public is behind Modi’s ongoing regulatory reforms despite the disruptive impact of November’s currency demonetisation,” said Avinash Vazirani, manager of the Jupiter India Fund.
The surprise decision to withdraw all of India's 500 and 1,000-rupee notes in circulation – a policy aimed at battling corruption – caused chaos as people and businesses across the country were unable to take or receive payments. However, official figures suggest India's economic growth was only
modestly affected.
Modi's other policies include implementing a goods and services tax in July of this year and swapping a subsidy-based system for one of direct benefit transfers.
“Although India is facing a period of short term pain my view is that it should lead to long term gain,” said Vazirani.
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