Una Galani,
telegraph.co.uk

The global economic crisis has not led to political chaos in India. The world’s largest democracy has delivered an unexpectedly clear victory to the ruling Congress-led alliance. Prime Minister Manmohan Singh gets a second term and a freer hand for reform. Investors get stability.

Investors didn’t have a strong preference for Congress over the Bharatiya Janata Party. The two are seen as having broadly similar economic ideology. Congress is slightly more focused on rural and social issues, but both are constrained by the need to appease local interests.

Investors’ main fear was an indecisive election. Exit polls had suggested a tight race between Congress and the BJP. There was even a chance of a stalemate that would have left the way open for an economically regressive government of the Third Front, a newly formed group led by the Communists.

But when the votes were counted, the Congress’ United Progressive Alliance had won by a wide margin. The UPA secured 260 of the 543 seats in the lower house of parliament, well above the 159 won by the BJP-led National Democratic Alliance.

The political landscape remains fragmented. The Congress alliance will still need to build a coalition to reach the 272 seats required to form a government. Singh will have to choose by June 2 from among India’s growing number of small and regional parties, each with its own demands.

Still, the strong showing should give Singh a good negotiating position. He will also have fewer fractious partners to stand in the way of his plans to modernise the economy.