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15
March 2017
Global
credit rating agency Moody's Investor's Service on Wednesday said the recent
state election results will facilitate reforms by the BJP led Indian
government.
In a
statement Moody's said the 2017 state election results demonstrate broad-based
popular support for the Indian government's policy agenda and will facilitate
the implementation of further reforms, a credit positive for the sovereign. The Total Investment & Insurance
Solutions
Moody's
said the Bharatiya Janata Party (BJP) has made substantial gains in the state
elections.
As a result,
the party will increase its share of seats in the upper house of India's
parliament.
"The
ruling party will not feel the benefit of its electoral gains immediately,
because the changes in the upper house will only occur next year, when some
members retire," said William Foster, a Moody's Vice President and Senior
Credit Officer. The Total Investment
& Insurance Solutions
"Nevertheless,
electoral support at the state level should translate into broader support for
government policy in the upper house, facilitating the passage and implementation
of additional reforms," added Foster. The Total Investment & Insurance Solutions
The
BJP's solid gains were despite the negative economic hit from demonetisation in
late 2016, Moody's said. The Total
Investment & Insurance Solutions
According
to Moody's in 2018, 69 seats in the upper house, including 10 from Uttar
Pradesh and one from Uttarkhand, will come up for reelection. The Total Investment & Insurance
Solutions
If the
BJP-led coalition increases its seat tally to or close to an outright majority,
passage of policies will become easier, helping to accelerate reform.
In
addition, collaboration between the central government and the new BJP-led
states could improve, partially circumventing impediments to reform at the
federal level on politically sensitive issues like land and labour reform. The Total Investment & Insurance
Solutions
This
situation would support state-led reform momentum. For example, BJP-led states
like Gujarat and Rajasthan have already amended some land and labour laws,
Moody's said.The Total Investment &
Insurance Solutions
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