By Divya Shukla
This turns out to be a million dollar question especially at the time when the elections are nearing. The events in the recent past have made it hard to see through the ambiguity. As a result it is very difficult for the analysts in predicting the economic as well as the political outcomes in the near future (i.e. next year).
From past three months, we have been witnessing so much of optimism in the BJP with regard to the elections. UPA’s continuous frantic short-term measures had led to large chunk of FIIs flowing out, amplifying the amount of desperation within the business community. The economic atmosphere had become so gloomy that we were sure that announcements for the elections getting preponed could be made at any point of time. And, Modi was already assumed to be taking the PM’s chair. Unfortunately there have been fresh controversies pouring in within BJP, with regard to the announcement of Narendra Modi for the PM’s candidacy. We frequently here about cold -war like situation within BJP on this issue. Initially proposal for Modi’s PMs’ candidacy did fill the business-class with hopes, but fresh doubts coming regarding the issue can cause a sense of despair in them.
While, on the other side of the scale is Congress, whose team despite comprising of the world-class economists from the best of economics schools has failed to contribute anything good for the economy yet. But, the bounteous rainfalls this time coupled with famous the “Rajan’s effect” being observed in no less than a week after assuming his office on September 5th, may make the Goddess of Fortune smile on the Congressmen once again.
With slight surge being observed in the factory output, and signs for inflation coming down, there is cheer once again in the ruling party, which was last seen in May due to the end of the super-cycle in the commodities. “Corruption” for the time being is the only trump-card which can help BJP (Modi has already mentioned about it in one of his speeches lately) lead the economy next year onwards.
But, a lot depends on the wisdom in the Indians decision-making power too. We don’t need a lens to see through what has been going on in the Indian politics for past one year. It was by God’s grace which helped the poor farmers of our country, averting them from committing suicide. But, had they helped in developing proper irrigation infrastructure, India- once an agrarian economy would have never seen declining role played by agriculture. Similarly, inflation deceleration can be attributed to the base effect observed in the recent past. And, the comfort in the current account deficit is due to the discomfort caused to the consumers by raising import duty on gold, raising fuel prices, curbing the import of non-essential goods and so on. Also, it was IMF’S caution to the Fed coupled with negative unemployment data from US that helped in clearing doubts in regard to the quantitative taper that was due in September.
Not, only this, aversion of strike on Syria by the US has also helped given some respite to the manufacturing sector.
So, we see the real factors that are building positive sentiment in the economy are primarily global in nature. If the Congress army is smart enough to plan it’s moves and takes advantage of the recent events, there is a possibility that their efforts could be applauded, while on the other hand, the BJP will have to prepare its agenda, on how will it take the economy forward if it wins the game. It has now
become a nail-biting situation for both the political parties as the events in the recent past will definitely be influencing their vote-banks to a great extent.
Divya Shukla: A graduate with a Major in Economics degree from the renowned University of Delhi and is about to enroll for Master’s program in Financial Economics in Babasaheb Bhim Rao Ambedkar University, Lucknow. Whilst this journey of financial economics is a career career path, has also developed a diverse field of interests, (especially in Economics, Politics, and Finance).