Govt with clear mandate will reduce uncertainty: Fitch

May 16 2014, 16:29 IST
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SummaryA government with a clear mandate can take chances of decisive policy action to address the economic challenges India faces, says Fitch.

With the BJP-led NDA scoring a landslide victory in elections, rating agency Fitch today said a government with a clear mandate will reduce uncertainty and take decisive policy actions to address economic challenges.

"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 note.

The rating agency further said that the new government should focus on bringing growth back to higher sustainable levels, which would require a strong pick-up in investments.

BJP-led NDA is expected to get over 330 seats in the recently-concluded general elections for the 16th Lok Sabha. The elections were held for 543 Lok Sabha seats.

Outlining the steps to strengthen investment climate, Fitch said a clear strategy for fiscal consolidation, enhancing fiscal credibility and creation of a low-inflation environment would be essential to restore confidence.

Further, a new structural reform push that could include reforms related to governance, infrastructure bottlenecks and reduction of red tape would also be key issues which needs to be looked upon, it added.

"Early results indicate Indian voters have given a strong mandate to the BJP to lead the next government. It will take some time to get clarity on the new government's broad economic strategy," it said, adding the agency will keep a close watch on the next government's first Budget, expected in July.

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