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Moody's Investors Service has said the strength of the next government's mandate following parliamentary elections this year will influence the medium-term trajectory for fiscal consolidation and governance in India. Parliamentary elections in India are due in April-May this year.

It further said a moderation in economic conditions in the US and the persistence of subdued growth in the euro area in 2024 will further dampen demand for goods produced in Asia Pacific and curb global commodity prices, but large emerging markets like India will be able to mitigate the impact.

Moody's in its 2024 outlook for APAC sovereigns said that the forthcoming elections, particularly those with greater likelihood of leadership transitions, including Indonesia, pose a degree of policy uncertainty as governments seek to manage key geopolitical relationships, especially regarding China and the US, current economic and fiscal strains, and longer-term commitments toward addressing climate change.

It said the prevalence of social risks amid political transition could undermine appetite for or progress on reform, curtailing access to critical external funding in a number of frontier economies such as Bangladesh, Pakistan and Sri Lanka.