Wednesday, January 16, 2019

The faster you grow, the more the attention.

"Well before election dates have been announced, the PM has embarked on a 100 day campaign that is expected to touch 20 states. If Modi was a primary reason BJP won a majority in 2014, the question is how effective will he be this time around?" asked R Sen. Although opinion polls are not reliable they show a general trend. "The respected Pew Global Attitudes Survey in early 2017" found that "Nearly 90% of respondents held a favorable view of Modi". However, Modi's popularity has slipped from 44% as the voters' choice as prime minister in mid-2017, to 34% in mid-2018, while Rahul Gandhi has risen from "an abysmal 9% in 2017 to 24% in 2018". Prof M Rangarajan draws on history to show how popularity of leaders and parties change with time. "More central is the question of questions. Are you better off than five years ago, and if not, why not?" he asks. What is alarming for Modi is that in the recent elections in Rajasthan, Madhya Pradesh and Chhattisgarh, "Of the 29 constituencies where Modi held rallies in the three states BJP won in only a third." In fact, there was an erosion of votes in the areas where Modi campaigned. On the other hand, "Of the 42 constituencies where Rahul (Gandhi) held rallies, Congress won nearly in half," with a "significant vote swing in favour of Congress and away from BJP". The same trend is visible on the internet. While Modi was far ahead of Gandhi in 2014 the gap has narrowed significantly, although he is still far ahead on social media. In an attempt to mollify his base Modi enacted a new law reserving 10% of government jobs and seats in higher education for upper caste Hindus. Reservation may soon be extended to the private sector. According to the criteria of the new law 99% of the rural population qualify for reservation, which makes it meaningless. "India's new foreign investment restrictions for its e-commerce sector, which includes giants such as Amazon.com and Walmart-owned Flipkart could reduce online sales by $46 billion by 2022, according to a draft analysis from global consultants PwC seen by Reuters." Jobs will be fewer by 1.1 million and tax collection will be short by $6 billion. The BJP wants the government to increase handouts, even if the fiscal deficit breaches its budget target of 3.3%. "And what's the so sacrosanct issue about keeping the fiscal deficit at less than 3.5 percent?" asked a BJP spokesperson. Fiscal deficit is already 114% of budget forecast. The Reserve Bank has relaxed borrowing restrictions from abroad, which means in dollars. While trying to win by whatever means necessary, Modi should remember that credit rating agencies are also watching. A downgrade will cause the rupee to fall and interest on foreign loans to rise, causing mayhem. The faster the economy grows the more attention it attracts. Problem.

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