India PM Narendra Modi set to take oath for third time on June 8 as allies pledge support
Indian Prime Minister Narendra Modi is set to be sworn in for a record-equalling third term on June 8, following a challenging election where his Bharatiya Janata Party (BJP) lost its parliamentary majority. Despite this setback, Modi has secured the support of key regional allies within the National Democratic Alliance (NDA) coalition, which will be crucial for forming a new government.
The Telugu Desam Party (TDP) from Andhra Pradesh and Janata Dal (United) [JD(U)] from Bihar, both pivotal regional players, have pledged their support to the NDA. This support comes at a critical time, as Modi's party, the BJP, won 240 seats, falling short of an outright majority and indicating a potential slow down in India's fiscal tightening, according to Moody's ratings agency.
Modi resigned on Wednesday, following a federal cabinet meeting that recommended the dissolution of parliament, marking the first step towards forming the new government. His new cabinet is scheduled to be sworn in on Saturday, as reported by local media.
The reliance on regional allies could complicate Modi's reform agenda, especially with the need to allocate more funds towards welfare projects in these states. Despite the slimmer majority, agencies like Fitch expect broad policy continuity, focusing on capital expenditure, ease of doing business, and gradual fiscal consolidation. The closer-than-expected election result might spur more productive reforms, according to India's chief economic adviser.
In conclusion, while Modi's weakened mandate presents challenges, the continued support from regional allies and the anticipated policy continuity signal a stable yet potentially challenging path for India's economic reforms and governance.
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