“The loss may complicate politics for the central government, but we don’t expect major implications on the economic front,” Fitch Ratings Asia-Pacific Sovereigns Director Thomas Rookmaaker said in a statement.
While the ruling NDA won only 58 seats (BJP 53) in the 243-member Bihar Assembly, the Grand Alliance got 178 seats. The alliance comprises JD(U), RJD and Congress. Fitch said the defeat does not change its medium-term economic outlook for India. The ratings agency has a “BBB-” rating on India with a stable outlook.
“With continued opposition the government will likely continue to try and pass legislation via ad hoc political deals, and if that does not work it may continue to resort to implementation of reforms at the state level,” Rookmaaker said.
A big win for the BJP in Bihar would not have translated into to sufficient support for the party in the Rajya Sabha anytime soon, Fitch added. The Bihar assembly elections result is a setback for the BJP-led central government’s plans to pilot the Goods and Services Tax (GST) Bill through parliament, an expert said on Sunday.
“The opposition parties will become emboldened with the Bihar elections result, which will make it more difficult for the (Narendra) Modi government to go through with the GST Bill,” economist Arun Kumar, till recently a professor at Jawaharlal Nehru University here, said.
The central government has set the target for implementing the pan-India GST from April next year, but it is currently stuck in parliament, especially over the cabinet’s nod to some changes recommended by a parliamentary panel, notably an extra one percent levy to compensate the states for potential tax losses.
“The Bihar results will also be a shot in the arm for dissenters within the BJP, while the government would henceforth be less one-sided and more willing to compromise on GST and other contentious legislation,” Arun Kumar said.
“The government will be willing to compromise, even on other major economic legislation like the Whistleblowers Bill for protecting informants, which the government was trying to dilute protection provisions. This is better from the governance perspective,” he added.
The opposition has been against the extra 1 percent GST levy as they feel this would not only push up prices, but also have a cascading effect. (IANS)