Rediff.com« Back to articlePrint this article

Impact of Aadhaar, GST on the economy to be significant: UBS

January 16, 2014 14:24 IST

AadharUpcoming general elections will remain a key driver for Indian markets during the first half of 2014, but some ongoing reform measures would bear fruit irrespective of the party coming to power, UBS has said.

"The biggest 'known unknown' is politics/elections, which will likely remain the key driver of the market in first half of this year," global financial services major UBS said in a report, while urging the investors not to ignore the 'unknown knowns' beyond the election noise.

Listing three such 'unknown knowns', UBS said that these initiatives -- Aadhaar unique identity programme, GST tax reforms and a Dedicated Freight Corridor rail infrastructure project -- are real and their effects will be felt in the foreseeable future irrespective of which political party is in power after the elections.

"We believe India's 'three arrows' are real and that the effects will be felt in the foreseeable future irrespective of

what political party is in power after the elections," UBS said, adding that their positive macro impact is likely to be significant and lasting.

"The positive macro impact is likely to be significant and lasting.

“This is especially so if we look at the arrows together rather than in isolation," UBS said.

Each of the three reform measures -- Aadhaar, GST and rail DFC -- address the country's twin deficits, the impaired investment cycle and promises to enhance productivity driven growth.

Aadhaar could help address the expenditure side of the fiscal problem, and drive financial inclusion with its own substantial benefits.

GST may materially aid the revenue side of the fiscal problem and the rail DFC could revive the investment cycle and potentially manufacturing/exports, apart from attracting foreign investments, it added.

"Three years from now, we believe India will look very different with the arrows in place," UBS said adding that ‘the impact of each arrow could be over 1 per cent of GDP.’

© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.