Indian stocks and the rupee rose to welcome the news: another parliamentary majority for the BJP party could grant Mr Modi the opportunity to make promised reforms a reality.
But once the euphoria around his emphatic win at the polls has faded, there will remain some tough economic challenges in his in-tray.
What did he do in his first term?
The economic record for Mr Modi’s first term in office is mixed.
He initiated some bold reforms, such as a new bankruptcy law, to help tackle a rise bad debts that was putting pressure on the banking sector.
His government reduced red tape, helping move India to 77th in the World Bank’s 2019 Doing Business ranking, an improvement from 134th place when he first took office in 2014.
India also became the world’s fastest growing economy during that first term.
But his biggest gamble, banning more than three quarters of the rupee notes in circulation in order to battle corruption, misfired and delivered a significant blow to economic growth. Without replacement notes ready in time, India’s gigantic informal economy was temporarily crippled – leading to job losses.
The rollout of a new national sales tax didn’t go smoothly either. In the long run the new tax is expected to boost economic growth by streamlining a multitude of complicated taxes into a single tax. But in the short term glitches around its introduction had a severe impact on millions of small and medium-sized businesses.
