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President Rule in Maharashtra and worst Q2 results mar Modi 2.0

By Javad M Goraya
November 15, 2019

News Analysis

In the worst day of its second tenure on Tuesday, Modi Sarkar was told by India’s largest public sector bank, State Bank of India that economy will grow only 4.2% in second quarter against 5% in last quarter. Last quarter result was already the worst in last six years. On top of that later in the afternoon, President rule was imposed in Maharashtra after BJP failed to meet the deadline to form a government 20 days after elections last month.

Maharashtra is India’s most important state and contributes most in its GDP compared to any other state i.e. around 15%. With political instability in the largest state, the economic worries will further aggravate and Singapore DBS Bank has already issued a forecast for 2nd quarter similar to that of State Bank of India. Industrial production contracted 4.3% in September, the worst performance since October 2011.

With a global economic slowdown underway, Indian pundits are increasingly worried about Modi economic vision and handling coupled with an assertive and macho political and regional agenda. Three years earlier at launch of his controversial demonetization policy, Modi asked for 50 days to show results. Indian Congress Rahul Gandhi said last week, “It’s 3 years since the demonetization terror attack that devastated the Indian economy, taking many lives, wiping out lakhs of small businesses & leaving millions of Indians unemployed”. Unemployment in India is now quoted at 45 year high.

Earlier this month, Modi left political economists bewildered by opting out of the 16 country Regional Comprehensive Economic Partnership (RCEP) out of fear that China will flood its marker with cheap goods. India was in RCEP negotiations for over seven years and other 15 countries including China have decided to move ahead with signing the agreement in 2020 without India.

In another proof that BJP decision making is left to the “Duo” i.e. Modi and Home Minister Amit Shah, Mr. Shah, wrote an article on Tuesday giving reasons for Modi opting out of RCEP when subject does not fall under his home ministry.

BJP’s economic worries do not seem to stop. As per State Bank of India report released on Tuesday, annual economy growth forecast for FY20 has now come down to 5 per cent from 6.1 per cent. State Bank of India joins other global agencies - the Asian Development Bank, World Bank, OECD, IMF and Reserve Bank of India (RBI) in downgrading India's FY20 growth rates.

BJP fared below expectation in last month Haryana State Assembly election falling six seats short of simple majority and had to form a coalition government. BJP has not been lucky enough in Maharashtra State Assembly as it fell apart with its alliance partner and ideological soul mate Bal Thackery’s Shiv Sena on power sharing formula. Shiv Sina leadership fell out with BJP saying it’s not honoring a 50:50 power sharing and both parties could not form a coalition government in Maharashtra. Shiv Sena also withdrew its minister from the coalition in Central government in Delhi as well ending a 30-year association with BJP. In last month elections, out of 288 seats of Maharashtra state assembly, BJP could only win 105 seats which was lower by 17 seats as compared to last elections.

Therefore, BJP became dependent on Shiv Sena which won 56 seats to form a government. As BJP and Shiv Sena fell apart, now Shiv Sena, NCP (54 seats) and Congress (44 seats) are trying to conclude a coalition government. Maharashtra Governor recommended President Rule after the end of stiff deadlines to all parties to cobble a coalition. President rule has been enforced for six months yesterday and all parties have been asked to prove majority within this period or fresh elections will be held in Maharashtra. Shiv Sena has moved the Supreme Court against Governor recommendation for President rule alleging that Governor acted on behalf of BJP.

A political crisis in the most important Maharashtra State in Indian politics and economy does not bode well for Modi 2.0 after a seemingly thumping majority in 2019 general elections. The state elections result in Haryana last month also did not reflect the swing in general elections 2019. Indian opposition alleges that Modi Sarkar have expanded its local and international agenda too far without required policies and understanding. Modi Sarkar is facing an uphill task to justify its unilateral annexation of Kashmir defying all bilateral and multilateral agreements and the 100-day curfew till now.

Over 60 members of US Congress, US State Department, European Union, have been asking India to end the curfew and communication blockade and allow access to diplomats. German Chancellor and Finnish Foreign Minister voiced the same concerns during their recent Indian visit. US State Department and other countries have voiced reservations against a national registration drive which will make 2 million mostly Muslims in Assam stateless. International media is lamenting that the decision to build a Temple in place of a 15th century Mosque will further marginalize minorities in India. The case against BJP top leadership including ex President LK Advani to martyr the Babri Mosque is yet to be decided after 27 years.

So far Modi 2.0 is struggling big time on major fronts and poses increasing challenges to regional and global peace and development.