In India, leftist parties that will provide crucial support to a new Congress-led government say they will not formally join the new government, but will support it from outside. The Congress Party and its allies won recent parliamentary elections, and is expected to pull together the country's next government soon.
India's Congress Party made strides over the weekend in creating the country's next coalition government, but the power of its leftist allies spooked investors and led to the sharpest share plunge in the market's history.
The Congress Party met the crisis with repeated assurances that it remains committed to economic reforms.
Senior Congress Party leader Pranab Mukherjee says a new government will continue to follow high-growth economic policies.
"Our objective is to improve the investment climate, we want to achieve eight to 10 percent growth. We can assure there should not be any panic," he said.
On Monday, leftist parties prompted fears about the stability of a new government after they announced they would not join a Congress-led coalition government, but support it from outside. The Congress Party's unexpected victory did not give it a clear majority, and it will have to depend on other parties for a parliamentary majority.
Analysts say foreign investors are worried that the powerful communists will stall economic reforms championed by business leaders. But Congress Party leader, Manmohan Singh, who is expected to play a pivotal role in forming economic polices, says differences with leftist parties will be resolved.
"The policy of the alliance will be pro-growth, pro-investment, pro-savings and pro-employment," said Mr. Singh. While the party says it will draft an economic program with its partners in the coming days, the leftist parties have given conflicting signals on whether they will support economic reforms being implemented by the defeated Hindu nationalist-led government. They have indicated they want to stop privatization of profit-making state-owned firms and limit foreign investment in the country.
Meanwhile, the way is clear for Congress Party leader Sonia Gandhi to form the next government. Her swearing-in ceremony as prime minister is expected later this week.
Hindu nationalists are threatening to boycott the ceremony if she does become prime minister to protest her foreign origin. Italian-born Sonia Gandhi would be the country's first foreign-born prime minister.