📷 Image Credits: NDTV
Indian Prime Minister Narendra Modi’s decision to reappoint Nirmala Sitharaman as the country’s finance minister is being viewed as a critical move for policy continuity in the market. With Modi’s new cabinet seeing the return of several familiar faces, including Sitharaman, the focus is on how she will navigate fiscal demands in a coalition government after the BJP’s failure to secure a majority in the recent elections.
The reappointment of Sitharaman has sparked positive reactions in the market, with India’s NSE Nifty 50 Index poised for a record close and shares of railway wagon makers on the rise. Debt investors have welcomed the news, viewing it as a sign of fiscal conservatism. The impact was evident in the significant decline in the ten-year bond yield.
Market analysts from various institutions have shared their insights on the key ministerial allocations in India. Goldman Sachs Group Inc. expects the government to continue its fiscal consolidation path while focusing on infrastructure development and rural spending. Bandhan Asset Management sees comfort in the bond market, emphasizing the importance of near-term bond yield movements. Nomura Holdings Inc. highlights the continuation of fiscal consolidation and infrastructure focus under Sitharaman’s leadership.
Barclays PLC anticipates policy continuity with unchanged ministries, while AU Small Finance Bank emphasizes the government’s role in job creation and the potential reduction in bond yields. Overall, observers are optimistic about the alignment of policies and the focus on fiscal discipline under Sitharaman’s reappointment.
Looking ahead, the upcoming budget in July will be a pivotal moment where the fiscal deficit target is expected to be a key focus. The government’s emphasis on job creation, infrastructure development, and fiscal consolidation will likely shape the economic trajectory of India under Sitharaman’s leadership.
