DNA Money Edit: What the new govt needs to do quickly

A series of challenges awaits the new government. While an all-encompassing demand recession is threatening to deflate India's economic growth, the government will have to look at all options to enhance employment generation, nudge the financial sector to health and minimise the damage from the trade war between the US and China, and the slowing global economy. Tax collections have undershot targets and threatened to derail the fiscal deficit target of 3.4% of GDP.

The dwindling consumption has put a question mark on India's economic growth going forward, though it has continued to grow at 7% in the last fiscal. Some analysts are suggesting that the GDP data due on May 31 may throw up a surprise with much less than 7%.

According to a report by Goldman Sachs, land and labour reforms, privatisation and export promotion would be at the top of the new government's agenda. It has suggested that the baseline growth may rise up to 10% in an acceleration scenario of effectively enforced major reforms or narrow to 5% in a regression scenario of stalled reforms. It has assessed three possible scenarios of reforms – acceleration, status quo and regression, and analysed the effect these might have on the economic growth. If the Modi government returns, as predicted by exit polls, rupee will continue to strengthen amid a strong dollar inflow.