The BJP on Thursday made history by winning the state election in Assam for the first time ever. Prime Minister Narendra Modi's party also improved its performance in West Bengal and Kerala, though it failed to make a mark in Tamil Nadu, where the AIADMK surprised pollsters by returning to power for a second successive term.
BJP's victory in Assam, coming on the back of successive reverses in Delhi and Bihar assembly elections, shows that the party's popularity is not waning, analysts said. This should provide momentum to economic reforms, they added.
"The upshot is that the outlook for economic reforms has brightened a touch," Shilan Shah of Capital Economics told Reuters.
Kotak Securities' Sanjeev Prasad said the BJP's win in Assam will halt its series of losses and strengthen its position as a national party.
"With no elections in the next 10 months, the focus will now shift to various executive reforms," he added.
While there's near unanimity about the prospects of economic reforms post assembly elections, analysts continue to worry about the fate of Goods and Services Tax (GST) Bill.
The GST, dubbed as the biggest tax reform since independence, has been approved by Lok Sabha, but it has been stalled in Rajya Sabha by Congress, which is the largest party in Upper House.
BJP's victory in Assam will not help the party increase its tally in the Rajya Sabha, where it is in a minority. Assam accounts for seven seats in Rajya Sabha, which will be up for re-election only in 2019.
But the crushing defeat of the Congress, which was ejected from Assam and Kerala, and failed to win power in Tamil Nadu and West Bengal with its alliance partners, has brightened the prospects of the Goods and Services Tax (GST), analysts noted.
According to HSBC, the BJP stands to benefit from the 56 seats coming up for re-election in Rajya Sabha. The Congress, which holds 14 of these 56 seats, is expected to lose some of its seats as 13 are in states that it does not control. At the same time, the number of seats held by smaller parties - with which the BJP can forge alliances - will rise, the investment bank said.
"As the size of this group increases, the BJP will have a larger selection of potential allies to approach, increasing its chances of getting the two-thirds majority required to pass the Goods and Services Tax Bill," said Pranjul Bhandari, chief India economist of HSBC.
Kotak Securities said the state elections do not affect the chances of implementation of GST, but it added that the government may take a stab at the GST in the next parliament session with or without the support of the Congress.
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