Modi’s re-election likely to improve flow of foreign capital for corporates: Rating Agency

THE landslide victory for prime minister Narendra Modi-led Bharatiya Janata Party (BJP) in the general election is likely to improve the flow of foreign capital for corporates in India, international rating agency S&P Global Ratings said today (27).

In the first back-to-back majority for a single party in over three decades, the Modi-led BJP on May 23 won 303 out of 542 Lok Sabha (lower house of the Indian Parliament) seats that went to polls, handing out a crushing defeat to the Congress and many other political opponents.

"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," the rating agency said.

Corporates in India, especially the 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, it said.

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, the agency said.

A decisive majority further assures foreign investors for whom continuity and policy stability are key investment considerations in emerging markets, it said.

Improvements in India's bankruptcy code, simplification of the country's tax regime and privatisation of inefficient state-owned enterprises are all likely to create opportunities for private enterprises going forward.

A focus on the revival of private consumption may boost growth in much-needed private investment, it said.

(PTI)