The victory of BJP in India's general election reduces policy uncertainty in the near term and gives the party a mandate to continue its economic reform efforts, according to Fitch Ratings.

The final budget for the fiscal year ending in March 2020 expected in July will give an indication of whether or not the BJP will step up economic reforms and return to fiscal consolidation after moderate fiscal slippages in recent years, it said.

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Official election results have confirmed a landslide victory for the BJP, which won over 300 lower house seats of 542 contested seats. This gave the BJP an outright majority in the lower house, securing a second five-year term for Prime Minister Narendra Modi. Voting began on April 11, and polls had suggested that the previous BJP-led coalition could have been returned with a smaller majority.

"Reduced uncertainty should improve business sentiment and private investment, which may help arrest the deterioration seen in some investment-related economic indicators in recent months such as cement and steel production," said Fitch.

The previous BJP-led government implemented a number of ambitious reforms, notably the Goods and Services Tax and the Insolvency and Bankruptcy Code. "We expect the re-elected government to remain reform-minded. The party's campaign manifesto pledged to improve the business environment and governance standards, strengthen infrastructure, and stimulate the manufacturing sector through a new industrial policy," said Fitch.

Details of the BJP's plans have yet to be announced, however, and it is unclear whether the new government will use its strong mandate to advance an ambitious reform agenda during its second term. Constraints to the reform agenda include a lack of a majority in the Upper House.