Modi-led govt. may not boost economy: Credit Suisse

Modi-led govt. may not boost economy: Credit Suisse

A Narendra Modi-led government at the Centre will likely not be able to boost the Indian economy, leading equity research firm Credit Suisse said in its latest report.

In its report titled "Elections: Much Ado About Nothing," Credit Suisse said a verdict in favour of the BJP would not help kick-start investments in the economy because merely a quarter of the stalled projects required clearance from the Centre government. In other words, nearly three-quarters of the projects have already been cleared by the Centre.

Credit Suisse said in the report, "We disagree with the consensus view elections can revive the investment cycle. Only a fourth of projects are stuck with the central government, and two-thirds of these are in power and steel."

As per the agency's estimates, of projects worth Rs 83 lakh crore under implementation, 437 projects worth Rs 21 lakh crore, are before the Cabinet Committee on Investment (CCI) for approval. Two-thirds of projects that are stuck are in power and steel, both of which are wracked with massive overcapacity.

The report noted that thermal power utilisation is at two-decade low, and suggested that only state governments could revitalize power demand.

The report mentioned four scenarios post elections: Modi-led NDA govt. with 2-3 allies; Modi-led NDA govt. with 5-6 allies; other leader-led NDA govt. with 8-10 allies or a Third Front govt. supported by Congress.

Opinion polls are currently projecting more than 220 seat verdict for BJP-led alliance.

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