Modi 3.0: Reduced political stability, need for consensus in coalition govt may hurt near-term investor confidence, says Moody's Analytics

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Key Points

Days after the BJP party failed to secure a majority in the Lok Sabha election 2024, Moody's Analytics said that the reduced political stability and the need to build consensus in a coalition government may slow down the decision making of the new government and might erode investors' confidence in the near term...

The ratings agency, in its report -- 'India Election Review: Voters Force the BJP into Coalition Government' -- noted that the Lok Sabha election results mean dynamics are about to change in Parliament, as coalition partners will gain influence and leverage in policy decisions, allowing for a more inclusive approach to governance...

"Reduced political stability and the need for consensus building that is inherent with coalition government might erode investor confidence in the near term," Moody's Analytics Associate Economist Aditi Raman said...

The Union Budget will be an early indicator of policy priorities, including short-and long-term responses to some of those key economic challenges.. arlier in the day, PM-elect Modi, in his speech, stressed that while a majority is needed to form a government, consensus is essential to run the nation..

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