A new Moody’s report argues that the biggest event on India’s political calendar this year will be neutral at best for the country’s creditworthiness—although, at worst, it could heighten existing risks.
India’s national election, due before the end of May, is dominating the country’s newsstands, and has put a freeze on many major policy and investment decisions. Perceptions that the Bharatiya Janata Party’s popular prime ministerial candidate, Narendra Modi, is pro-business have buoyed Indian stock markets even as corporate earnings have disappointed.
But the New York-based credit-ratings agency says the contest between the governing Congress party and the BJP will hardly be decisive for India’s economic prospects.
A strong showing by either of the two major parties “would not be a near-term game changer,” it says in the report. The correlation between economic performance and the party in power is historically quite weak, it notes. What could be a bigger influence is the state of the global economy. Factors such as the budding recovery in the U.S. and Europe, the shaky economic outlook in China, and the Federal Reserve’s withdrawal of monetary stimulus will continue to buffet India and many other big emerging markets.
via Indian Election Not a ‘Game Changer’ – India Real Time – WSJ.
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