Moody's: BJP's state election win shows broad-based support for reform agenda

Moody's Investor Service on Wednesday said that PM Narendra Modi and his Bharatiya Janata Party's (BJP) state elections 2017 win shows support for Indian government's policy agenda and will facilitate the implementation of further reforms.

On March 11, 2017, results of state elections were announced where Modi-led BJP won majority in India's largest state -- Uttar Pradesh. This is signficant in many ways as BJP, although, has a majority in the Lok Sabha, it is severely stunted in Rajya Sabha.

William Foster, a Moody's Vice President and Senior Credit Officer said, "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."

"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.

Moody said, "In 2018, 69 seats in the upper house, including 10 from Uttar Pradesh and one from Uttarkhand, will come up for reelection," adding, "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."

Additionally, 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 labor reform, stated Moody's.