MUMBAI, India — India Inc. breathed a huge sigh of relief Sunday, a day after the ruling Congress Party won one of the most definitive electoral victories in nearly two decades of fractious coalition politics.
Congress' victory — and the near-collapse of India's once-powerful Communist parties — means key reforms in insurance, pension funds, banking and retail are now likely to get enacted.
But that doesn't translate into a mandate for sweeping pro-market liberalization, analysts say.
The global financial crisis has tempered India's appetite for deeper foreign investment and looser regulation. Moreover, Congress, which oversaw an unprecedented four-year boom, has cast itself as the party of "inclusive growth," a policy approach aimed at helping India's vast underclass while also pushing free-market reforms. It is unlikely to roll back costly social welfare programs that helped the party win the election — but also added to the nation's burgeoning fiscal deficit.
With the Congress-led coalition capturing 262 seats in India's 543-seat Parliament, Congress officials were in talks Sunday to finalize their political alliance — seeking the 10 additional spots needed to nudge them over the halfway mark in Parliament.
The party's strong showing put to rest pre-election fears of an unwieldy coalition.
Nandan Nilekani, co-chairman of Infosys, one of India's largest information technology companies, called the result "very positive for India's economic policy and reform."
"This is a very wise signal from the voters that they want a government which is stable," he said.
Jubilation reigned on the pages of India's major business papers Sunday, with predictions of a bright future of rising stock markets, surging foreign investment, rebounding growth and fast-tracked economic reform.
Industry groups and business leaders quickly trotted out lists of hoped-for policy changes, urging the government to make good on its electoral mandate through tax reform and greater investment in technology and infrastructure.