A strong mandate in favor of either the Congress or the BJP would not by itself be a ‘game changer’ for India’s economy, even as surveys indicate that support for the Bharatiya Janata Party is gaining momentum, Moody’s Investor Service said.
The firm, part of the global rating agency Moody’s, said the impact of external factors on India’s growth is being underestimated.
“Expectations that the ballot box can deliver a strong, reform-minded central government, with the ability to re-ignite the country’s near-term economic fortunes have gained currency,” it said. “However, a strong showing by one of the major parties would not, by itself, translate into an immediate improvement in economic growth and fiscal consolidation; two determining factors of the country’s overall credit quality.”
It noted that the BJP has gained more and more public support since mid 2013, heightening chances of a more stable government at the center.
Moody’s also pointed out that the secular increase in the importance of regional parties “will continue to hamper the efficacy of nationwide policymaking, regardless of the political complexion of the eventual central government.”
For long a single-party system, India has seen the emergence of several regional parties such as Samajwadi Party and Telugu Desam Party that arose as an alternative to the Congress Party over the last 20 years.
The BJP has seen its prospects pick up fast in the last six months after it announced Gujarat Chief Minister Narendra Modi as its Prime Ministerial candidate.
Modi, who belongs to the backward classes, has helped the BJP broaden its appeal beyond the upper castes to the backward castes, which forms the biggest chunk of Indian society.