Fitch Ratings on Monday said the BJP's defeat in the Bihar polls is unlikely to have any major impact on the Indian economy, but could complicate politics for the government. While the ruling NDA won only 58 seats (BJP 53) in the 243-member Bihar Assembly, the Grand Alliance got 178 seats.
Fitch Ratings on Monday said the BJP’s defeat in the Bihar polls is unlikely to have any major impact on the Indian economy, but could complicate politics for the government. While the ruling NDA won only 58 seats (BJP 53) in the 243-member Bihar Assembly, the Grand Alliance got 178 seats. The alliance comprises JD(U), RJD and Congress. Here are 4 reasons why the Indian economy may shrug off Bihar election results and keep chugging along:
1. “The loss may complicate politics for the central government, but we don’t expect major implications on the economic front,” Fitch Ratings Asia-Pacific Sovereigns Director Thomas Rookmaaker said in a statement. Fitch said the defeat does not change its medium-term economic outlook for India. The ratings agency has a “BBB-” rating on India with a stable outlook.
2. With continued opposition the government will likely continue to try and pass legislation via ad hoc political deals, and if that does not work it may continue to resort to implementation of reforms at the state level.
3. A big win for the BJP in Bihar would not have translated into to sufficient support for the party in the Rajya Sabha anytime soon.
4. Bihar assembly elections result is a setback for the BJP-led central government’s plans to pilot the Goods and Services Tax (GST) Bill through parliament. “The opposition parties will become emboldened with the Bihar elections result, which will make it more difficult for the (Narendra) Modi government to go through with the GST Bill,” economist Arun Kumar, till recently a professor at Jawaharlal Nehru University here, said. That means, the government will be more willing to compromise, even on other major economic legislation like the Whistleblowers Bill for protecting informants, which the government was trying to dilute protection provisions. This is better from the governance perspective.