Prospects for India to end-2016

Subject Prospects for India to end-2016. Significance Policymakers are counting on improved agrarian performance, cheaper credit and economic diplomacy to drive growth in coming months. On the political front, after a modest triumph in the last round of regional elections, Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) are emboldened but still politically encumbered.

Subject Prospects for India in 2017. Significance As 2017 approaches, both hope and uncertainty prevail regarding India's economic prospects. Politically, the opposition to Prime Minister Narendra Modi's Bharatiya Janata Party (BJP)-led government is still ineffective, but important regional elections will test the BJP next year. India's diplomatic outreach will be complicated not least by the election of Donald Trump as the next US president.


Subject Prospects for India in the fourth quarter. Significance Flustered by a stock market collapse and continuing currency depreciation, Prime Minister Narendra Modi's government will enter the fourth quarter with some trepidation. Like all emerging markets, India faces economic uncertainty, with growth slowing and foreign capital exiting. Little relief is forthcoming on the political and policy fronts for Modi's Bharatiya Janata Party (BJP). The only bright spot may be diplomatic outreach.


Subject Caste politics in India. Significance In a sign of Prime Minister Narendra Modi's ability to shape the political agenda, the National Democratic Alliance's candidate Ram Nath Kovind was sworn in as India's 14th president on July 25. With attacks on Dalits (low castes) in the north Indian heartlands of the ruling Bharatiya Janata Party (BJP) surging, the nomination of a Dalit for the presidency was designed to strengthen the party's appeal to the community ahead of state elections. Impacts Support for the main opposition Congress party among Dalits will decline in Gujarat. Beef and leather exports will fall despite the Supreme Court suspending the ban on trading cattle for slaughter. Anti-Muslim violence may increase across the country.


Subject Coalition negotiations in Spain. Significance Attempts to form a government following the repeat election on June 26 remain fraught with difficulties. Although negotiations between the Popular Party (PP) and the Citizens party are under way, the Socialist Party (PSOE) has so far refused to support Prime Minister Mariano Rajoy. Assistance from both Citizens and the PSOE is essential to the success of his efforts to form a minority government. Impacts Another failure by the political parties to deliver a government outcome would prompt moves for renewal to regain public credibility. Lacking an effective political response, Rajoy will continue to use the constitutional court to punish Catalan pro-independence efforts. Regional elections in the Basque Country and Galicia on September 25 will complicate negotiations between the PP and its electoral rivals.


Significance Proponents of Prime Minister Narendra Modi's economic agenda await the political responses of India's urban middle classes. It was above all the urban middle-class vote at the 2014 general elections that took Modi's Bharatiya Janata Party (BJP), and its National Democratic Alliance (NDA), to its sweeping victory. Impacts BJP could become isolated by relying too much on the middle-class vote. Its lack of interest in rural voters is reflected in its neglect of agrarian strife. Middle-class voters seek quality employment, which Modi's economic policy is failing to generate.


Significance Each of these states except Punjab has a government led by Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP). Punjab is one of just three states with a chief minister that belongs to India’s main opposition Congress party. Impacts A poor showing by Congress would further reduce its leverage with other opposition parties in talks over forming a broad anti-Modi alliance. Victory in UP would enhance Chief Minister Yogi Adityanath’s national profile. Election campaigning will likely lead to a spike in COVID-19 cases.


Significance Sirisena's victory is a potential game-changer: instead of entrenching the autocratic tendencies of his predecessor Mahinda Rajapaksa's administration, the election results hold out the promise of democratic consolidation under a new government with a robust mandate for constitutional and policy reform. However, the diversity of the coalition backing Sirisena and the sharing of power with newly appointed Prime Minister Ranil Wickremasinghe augur a period of volatility. Impacts If Tamil parties emerge as 'kingmakers' in April, governance of war-torn Northern and Western provinces is likely to be overhauled. Delhi, Washington and Brussels will welcome the political transition. Long-term growth prospects will turn on the precise rebalancing of budgetary allocations.


Subject E-commerce in India. Significance Following nationwide protests from small traders in late 2014, key sections of the Bharatiya Janata Party (BJP) government have demanded that Prime Minister Narendra Modi act against India's rapidly growing e-commerce platforms. Particular targets are the largest e-commerce players, mostly Indian, but including Amazon India, which have benefitted from large infusions of foreign capital and stand accused of side-stepping India's strict limits on foreign investment in multi-brand retail. Impacts Any improvement in transport and distribution infrastructure will boost e-commerce. Proliferation of mobile and banking facilities is key to expanding online retail. Small traders will oppose the expansion of e-commerce, causing greater political losses for the BJP than any other party.


Subject Outlook for the post-transition political system. Significance The August 7 constitutional referendum will be conducted under tightened controls on political organisation, making a 'yes' vote more likely. Although the Democratic Party criticises the draft for its attempt to return Thailand to a semi-authoritarian state, efforts by deposed former Prime Minister Thaksin Shinawatra's 'red-shirt' supporters to organise protests offer the only real opposition to the junta's plan. This struggle foreshadows the political system that is likely to emerge after the next parliamentary elections. Impacts Regulatory risk to investors post-transition would be limited: the military, the Democrats and the PTP are pro-business. China will not alter the status quo in its Thai relations, but will need to invest in building ties with the next monarch. Washington will tolerate most eventualities, except a violent crackdown against the military's opponents.


Significance Rifts within the political elite are deepening, evidenced by the departure of former Prime Minister Jean Ravelonarivo -- and his cabinet -- last month. However, the installation of a new administration does not portend stability. Impacts The central bank's decision to cut its benchmark interest rate to 8.3% from 8.7% will facilitate borrowing by firms and households. This is unlikely to boost GDP growth given the countervailing effects of political volatility and low commodity prices. The UN secretary general's appeal (on an official trip earlier this month) for the government to tackle graft is unlikely to be heeded. If Madagascar experiences another coup, the Southern African Development Community bloc will likely expel it -- again.


Sign in / Sign up

Export Citation Format

Share Document