Fitch Ratings on NDA's Challenges with Economic Reforms

Fitch Ratings predicts that coalition politics and a weakened mandate will pose challenges for India’s NDA government in passing ambitious economic reforms. While major policies like land and labor laws remain contentious, Fitch expects policy continuity with a focus on infrastructure and gradual fiscal consolidation under Prime Minister Narendra Modi.

As the NDA is poised to form the government, Fitch Ratings reported on Thursday that coalition politics and a weakened mandate would complicate the passage of ambitious reforms.

'Major reforms to land and labour laws will be on the new government's agenda to enhance India's manufacturing sector, but a weaker mandate will make their passage challenging,' Fitch said in a statement.

The BJP fell short of a single-party majority in the 543-seat parliament but is expected to secure enough support from allied parties. This should support broad policy continuity under Prime Minister Narendra Modi, with focuses on infrastructure, business environment, and fiscal consolidation, Fitch Ratings noted.