Modi's Party Crashes to Defeat, Casting Doubt on His Re-Election
Modi's Party Crashes to Defeat, Casting Doubt on His Re-Election
Prime Minister Narendra Modi is having his worst week in a long time. On Tuesday his Hindu nationalist Bharatiya Janata Party crashed to electoral defeat in five Indian states. The losses set up a possibility that once seemed remote: Voters may throw Mr. Modi out of office this spring.
The BJP’s main opponent, the left-of-center Congress Party, suddenly looks like a plausible contender for national power. In three crucial states in the populous Hindi heartland—Chhattisgarh, Madhya Pradesh and Rajasthan—Congress governments will replace BJP incumbents. Regional parties came out on top in two other states, Telangana in the south and Mizoram in the northeast.
It’s too early to write off Mr. Modi’s prospects. He remains a popular figure and powerful orator, and his party is India’s best-funded and best-organized. Yet it’s clear Mr. Modi’s tax-and-spend model of development is failing to enthuse voters. Tuesday’s results suggest discontent in the Hindi heartland, a region that in 2014 gave the BJP two-thirds of its parliamentary seats.
Simply put, Modinomics is not working. When Mr. Modi was elected, he promised to invigorate the economy by providing “maximum governance” with “minimum government” and replacing red tape with a red carpet for business. Instead he chose to dodge politically contentious reforms that would have allowed market forces to play a larger role in India’s inefficient economy.
Rather than selling money-losing state-owned companies, making it easier for businesses to hire and fire workers, or privatizing sclerotic government banks, Mr. Modi has fashioned himself a grand benefactor for the poor. On the campaign trail, he boasts about what he appears to view as his greatest achievements: opening more than 330 million bank accounts, providing new cooking-gas connections to 120 million households, and installing 90 million toilets.
Why aren’t voters satisfied with the largess? In the Indian Express, journalist Harish Damodaran points out that the three heartland states where BJP governments lost did a good job of following the prime minister’s playbook. They built plenty of roads, houses and toilets, and provided villages with electricity, cooking gas and internet connections.
But they fell short in one important area: boosting incomes. Crop prices have risen slowly over the past four years in a part of the country that depends on agriculture. Few nonfarm jobs have materialized.
Making matters worse was Mr. Modi’s harebrained decision two years ago to invalidate nearly 90% of India’s currency by value, which gutted many small businesses. The measure hit construction especially hard, hurting large numbers of migrant workers. An overly complex national goods-and-services tax introduced last year punished small businesses unused to onerous filing requirements.
By arming tax inspectors with draconian powers, Mr. Modi has also put a damper on business sentiment. Earlier this year,
Morgan Stanley
reported that nearly 23,000 U.S.-dollar millionaires have left India since 2014. The firm’s Ruchir Sharma criticized “the tightening grip” of India’s “overzealous tax authorities.”
The lesson for India’s next prime minister—or for Mr. Modi, should he win a second term: India’s job crisis is complex. The rise of robotics, combined with a souring toward free trade in developed economies such as the U.S., may make it hard for India to emulate China by rapidly moving millions of workers from unproductive farm work to better-paid factory jobs. But only a market-based approach has any chance of succeeding. Businessmen, not bureaucrats, will create the job opportunities voters seek.
The odds of Mr. Modi correcting course in the few remaining months of his term are vanishingly slim. If anything, he appears to be gearing up for more populist spending to sway voters thus far unimpressed with his efforts.
On Monday Reserve Bank of India Gov. Urjit Patel resigned from his position. Mr. Patel cited “personal reasons” for his departure, but most observers interpreted it as a protest against government attempts to railroad the central bank into following irresponsible policies.
The new governor, a former bureaucrat known for his proximity to the Modi government, may allow politicians to fund pre-election spending by raiding the bank’s rupee reserves. He may also allow weak state-owned banks to open the lending spigots, and support interest-rate cuts more readily than his predecessor, a respected technocrat with a reputation as an inflation hawk.
Unfortunately for India, the Congress Party shares Mr. Modi’s populist bent. Extravagant promises of welfare for the unemployed and loan waivers for farmers marked its election victories this week.
As India gears up for its national election, the BJP’s defeats have thrown the race open. But while we can’t predict the outcome, we can say one thing for certain: Whoever wins won’t be promising market-friendly economic reform.
SOURCE LINK BEST ONLINE NEWS WEBSITE https://www.beviral.online
Comentarios
Publicar un comentario