Price of change
It is too early to tell how much effect the Congress Party defeat in India's elections will have on its present policy of opening up the national economy to the outside world. But whatever government takes office, it is unlikely to be as welcoming towards foreign investors as the administration of Prime Minister P.V. Narasimha Rao.
At its most extreme, a coalition government led by the Bharatiya Janata Party (BJP), which is likely to emerge with the most seats in the new parliament, could stall India's economic revival and provoke renewed friction with neighbouring Pakistan.
Some of the BJP's election rhetoric has been extreme, particularly its call for 'economic nationalism', which would stall foreign investment in consumer industries. But it is still far from certain it will be able to form a government. The BJP's extreme Hindu nationalism frightens the smaller secular parties whose support it needs to command a majority in parliament, meaning the Congress Party may yet be able to put together a coalition.
Even if the BJP does take power, it can be expected to become more pragmatic once in office. After some initial hiccups, BJP-led state governments have generally striven to attract foreign investment, and the party's election manifesto stressed it would continue to do so in areas such as power and telecommunications.
But, while existing reforms are unlikely to be reversed, the momentum towards further change seems likely to slow, whatever the shape of the coalition administration that finally emerges. That means painful decisions on issues such as privatisation of state-owned industries are likely to be put off.
These election results mark a setback to India's process of economic transformation and may usher in an era of unstable coalitions. Unfortunately this will remain the trend, possibly for several years, until another election throws up a party with enough support to govern alone.