Rating agency Standard & Poor's on Monday said that the decisive victory for the incumbent government led by the Bharatiya Janata Party (BJP) in India's Lok Sabha elections removes one significant source of uncertainty for corporates in India.
The potential for reforms following the victory is likely to maintain buoyancy in local funding markets and improve the flow of foreign capital for corporates in India, S&P said in a statement said.
Corporates in India--especially rated ones--remain hostage to a number of worries surrounding a slowdown in global growth and trade wars. But now, the continuity of government--which was widely cited as an additional source of uncertainty in the run-up to the elections--is no longer one of them.
The first couple of years after an election in India's five-year election cycle has historically seen more opportunities for administrative reform and measures to facilitate ease of doing business.
A decisive majority further assures foreign investors for whom continuity and policy stability are key investment considerations in emerging markets, it added.
Rating agency said improvements in India's bankruptcy code, simplification of the country's tax regime, and privatization of inefficient state-owned enterprises are all likely to create opportunities for private enterprises going forward. In addition, a focus on the revival of private consumption may boost growth in much-needed private investment.