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Congress stands fair chance in forming coalition government: Fitch Solutions

The report titled 'Political Risk Analysis - Indian Election Could Lead To Fragmented Parliament And Weak Policymaking', also added that a likely coalition government post general elections due in April-May will have negative implications for continuity of policies of the current government.

PTI PTI
New Delhi Published on: February 21, 2019 19:57 IST
Representative Image
Image Source : PTI

Representative Image

Fitch Solutions, the research arm of Fitch Group, on Thursday said the Congress has a "fair chance" of forming a coalition government in the next general election as re-election will be a "tough challenge" for the Modi-led NDA government given the ongoing rifts between the BJP and potential kingmaker parties.

The report titled 'Political Risk Analysis - Indian Election Could Lead To Fragmented Parliament And Weak Policymaking', also added that a likely coalition government post general elections due in April-May will have negative implications for continuity of policies of the current government.

"We at Fitch Solutions are bucking the overwhelming consensus at this juncture that the BJP will most likely form the next government after the upcoming elections, and we believe that the INC has a fair chance of marshalling a coalition government, given ongoing rifts between the BJP and potential kingmaker parties," it said.

The re-election of the NDA government, it added, will be a tough challenge for the ruling BJP due to several reasons, including declining support for the BJP and Prime Minister Narendra Modi, as indicated by the BJP's loss in three assembly elections held in November-December 2018, and the agrarian distress.

It, further, said the increased spending measures announced in the 2019-20 Interim Budget will do little to shore up support for the BJP as the "token" cash dole out to farmers "pales" in comparison to the sweeping farm loan waivers enacted by the Congress state governments in Rajasthan, Madhya Pradesh, and Chhattisgarh.

"We believe that the Rs 75,000 crore assured income support scheme for small and marginal farmers is likely to have minimal effect on swinging support towards the BJP among rural farmers. This is because the scheme is planned to target around 120 million farmers which only amounts to Rs 6,000 per individual annually," it said. 

Fitch Solutions also said that the recent attack by Pakistan-based terrorists on Indian jawans in Kashmir on February 14 is a "strong opportunity" for the BJP to rally support should it succeed in conveying a tough stance towards the perpetrators and against Pakistan.

"We believe that the recent attack by Pakistan-based terrorists on Indian paramilitary forces in Kashmir is a strong opportunity for the BJP to rally support should it succeed in conveying a tough stance towards the perpetrators and against Pakistan. Such a move could boost support for the Hindu nationalist sentiment of the BJP, and poses upside risks to the BJP’s re-election chances," it added.

It also said that it would not be easy for main opposition party Congress, to wrestle power from the BJP, and the final make-up of the government will depend on whether the Congress or the BJP is able to form a coalition with the numerous smaller parties in 543 member Lok Sabha.

"Such a coalition implies that policymaking will become more challenging following the elections, and this would also have negative implications for policy continuity," Fitch Solutions said.

The agency also revised down India's short-term political risk index score to 65.8 (out of 100), from 69.8 previously, reflecting a reduction in scores across policy continuity, policy-making, and also the security component.

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