A government with a clear mandate reduces uncertainty and increases the chances of decisive policy action to address the economic challenges India faces, Fitch Ratings said in its preliminary observations on the Indian voters giving a strong mandate to the Bharatiya Janata Party to lead the next government.
"While Fitch has never taken a view on the next government’s party colour, a government with a clear mandate reduces uncertainty and increases the chances of decisive policy action to address the economic challenges India faces.
“We will see whether the new government takes those chances," Fitch said in a statement.
The rating agency observed that the most salient issue for the new government from a sovereign credit perspective seems to get growth back to higher sustainable levels, which would require a strong pick-up in investments.
The investment climate could be strengthened by a number of measures, including a clear strategy for fiscal consolidation, enhancing fiscal credibility, creation of a low-inflation environment, and a new structural reform push, that could include reforms related to governance, infrastructure bottlenecks and reduction of red tape.
"It will take some time to get clarity on the new government's broad economic strategy. One key near-term data point will be the next government’s first Budget, expected in July, " said the agency.