Indian Elections 2009

Barely two months before the next Lok Sabha elections, latest economic indicators bring more bad news for the nation. Our growth rate has slowed down to 5.3% - the lowest since 2003. Bombay Stock Exchange (BSE) index fell to 8,773 points after dismal GDP data weighed on sentiment. The Indian rupee has also plunged to an all time low of Rs 50 against the US dollar.

• Slowdown pulls down India’s growth to 5.3%, Times of India, Feb 27, 2009
• Economic growth slows drastically to 5.3%, Indian Express, Feb 27 2009

Barely a month back the International Monetary Fund (IMF) had predicted that India’s growth rate would fall to about 5% (See our previous post on this.) The prediction has come true too close for comfort; again indicating that the Economy will be the biggest issue in the coming elections.

February 27th, 2009 | Tags: BSE, Election Issue : Economy, Indian Economy, Rupee | Category: Economy, Elections | Comments (1)

The UPA Government released the interim budget today with mixed reviews. Finance minister, Pranab Mukherjee, presented the budget in the Lok Sabha. Revised budget estimates for 2008-09 increased to Rs 9,09,053 crores from Rs 7,50,884 crores.
Key points of this budget include a significant increase in the Defense outlay, increased allocation to flagship projects and loan waiver to farmers of the tune of Rs 65,300 crore. The minister did not make any changes to the existing Tax and Duty structure.

• Interim Budget raises defence outlay by 34%, Times of India, Feb 16 2009
• Budget focuses on flagship schemes, tax unchanged, Indian Express, Feb 16, 2009
• Complete coverage: Interim Budget, NDTV Profit
• Full text of Pranab Mukherjee’s Budget speech, Times of India, Feb 16 2009

The industry leaders have given this budget a thumbs down. There appears to be a general consensus among Industry Leaders that nothing more could be expected from the government in an election year.

• India Inc gives thumbs down to budget, Indian Express, Feb 16, 2009
• Sensex plunges as budget disappoints, NDTV Profit, Feb 16 2009
  

The one good thing about this budget is that the UPA government has avoided announcing unnecessary populist schemes that are imposible to implement in the current economic scenario. That shows the government’s maturity and they should be commended for it.

February 16th, 2009 | Tags: Budget, Economy, Election Issue : Economy, UPA government | Category: Economy, Elections, UPA/Congress | Leave a comment

The Finance Minister, Mr. Pranab Mukherjee will be presenting the last annual budget of the UPA government today. The budget, just before the Lok Sabha elections, is expected to be tame and populist with no major changes.

• Populist handouts likely in UPA’s Budget, Times of India, Feb 15 2009
• Cos’ budget wish list: New jobs, infrastructure, Economic Times, Feb 15 2009
• Govt to eye polls, economy in mini budget, Hindustan Times, Feb 15 2009

The UPA government has managed the economy of the nation well. This is not surprising given that Economy is our PM’s forte. Even though the nation is facing a severe economic downturn, there is no mass panic among the electorate, or if there is it is not being reported in the media. The one thing obvious after talking with people is that majority of the Indians believe that economy is in a recession - many of them have lost their jobs or know someone close who has lost theirs. So while the main stream media is shying from using the “R” word, the electorate is convinced they are in one.

The main opposition has not been able to play this up in their campaigning. The right wing parties appear to be more interested in moral policing than in formulating strategic directions on how they will deal with this downturn in the economy if voted to power. Mr. Advani’s portal contains mere speeches (as on Feb 11) on this issue and no single document that lays down the economic plan.

We will be following the details of the budget and summarize in our next post. Stay tuned.

February 15th, 2009 | Tags: Budget, Economy, Election Issue : Economy, Indian Economy | Category: Economy, Elections, Indian Politics, UPA/Congress | Leave a comment

As the last budget session begins for the UPA government, the annual budgets will be presented soon. And in a election year, they are bound to be populist in nature with lots of free sops being distributed among the electorate.

Today, Friday the 13th, the Railway budget was submitted by the Railways Minister, Lalu Prasad Yadav. The budget as expected did not throw up any surprises. Besides lower fares, the populist budget included a investment of Rs 12,000 crores for the recently proposed East-West freight corridor from Kolkata to Mumbai,.

• Lalu announces 2% cut in mail, express, AC fares, Times of India, Feb 13, 2009
• Special coverage : Railway budget, Economic Times, Feb 13 2009
• Interim Railway Budget: Lalu signals fare cuts, Indian Express, Feb 13, 2009
• Lalu Prasad to present interim railway budget today, Hindustan Times, Feb 13, 2009

Mr. Yadav’s tenure as the Railway Minister in the UPA government has been satisfactory. He has managed to keep the fares low inspite of the volatility in Oil prices for the past few years. Other achievements during his tenure include improving the Freight train capacity and setting up the Railway line in troubled Kashmir. The train ridership has also increased significantly in the past few years, though it is difficult to assess whether this increase is a natural consequence of economic growth in the country, or a consequence of steep rise in Airfares, or a result of improved services provided by the Railways.

The reason we term his tenure as satisfactory is that Mr. Yadav has continued more of the same and we haven’t seen any dramatic improvements in the quality of service in our trains or in the number of trains. Classic example is the local trains system in Mumbai. Inspite of contributing significantly to the Railways exchequer, the Mumbai local trains are bursting at seams and not able to accommodate the rising ridership.

• Irate Mumbai commuters ground train services, Hindu, Feb 4, 2009

There have also been recent reports on the falling standards of the Indian Railways, specially pertaining to cleanliness in the train compartments and stations.

• Ticket to filth, Hindustan Times, Feb 11, 2009

So while the Railway Minister may pat itself in the back for it’s performance in the last 5 years, the Indian Railways have not been able to keep up with the rising population and electorate’s expectations.

February 13th, 2009 | Tags: Budget, Economy, Lalu Prasad Yadav, Railways, UPA government | Category: Development, Economy, Elections, Lalu Yadav, UPA/Congress | Leave a comment

The Indian Economy is expected to slow down faster than thought in the past. The International Monetary Fund has predicted in it’s World Economic Outlook that our economy will only grow at about 5%. While this may be a positive number compared to the growth predicted in the western countries in Europe and Americas, it is lower that that predicted by the UPA government.

• IMF lowers India’s 2009 growth to 5%, Times of India, Jan 29, 2009

Last week, the Prime Minister’s Economic Advisory Council had lowered India’s growth forecast for the current fiscal to 7.1 per cent, against its earlier prediction of 7.7 per cent, on account of the impact of the global meltdown.

• Global meltdown may pull down India growth to 7.1%, Times of India, Jan 23, 2009

This economic slowdown is not good news for the UPA government as it could result in anti-incumbancy feeling among the voters. What is even more gloomy, is the prediction of loss of many jobs in the process. While the growth numbers may not register with the average voters, loss of thousands of jobs world wide will definitely alarm them. It is not every year that ILO predicts a loss of 50 million jobs worldwide.

Economy is going to be the biggest issue in the coming elections. So far we have not heard of any concrete strategy from the opposition about dealing with this downturn. NDA’s PM candidate, L K Advani’s portal doesn’t comment on this major international issue. The PM is on stronger ground on this issue and Indians trust him more in getting us out of this downturn.

January 29th, 2009 | Tags: Election Issue : Economy, Indian Economy, UPA government | Category: Dr. Manmohan Singh, Economy, Elections, UPA/Congress | Leave a comment

In a extremely disturbing news from the Indian IT industry, Satyam Industries founder and Chairman, Ramalinga Raju, has made the shocking disclosure of fudging the company’s accounts to the tune of Rs 8000 crores (Rs 80 billion) . This leaves the company and it’s 53,000 employees with a uncertain future.

• Rs 8,000 crore fraud hits Satyam; Raju may get 7-yr jail, Indian Express, Jan 7, 2009
• Satyam chairman quits after admitting to fraud, Hindustan Times, Jan 7, 2009
• Lies, confessions & the law, Hindustan Times, Jan 7, 2009

The market and investors reacted sharply by dumping the company’s shares. By end of the day today, the fourth largest IT company in the country lost a staggering Rs 10,000 crores in market capitalization pushing down the scrip by 78 per cent to Rs 39.95 at Bombay Stock Exchange.

The UPA government, regulator SEBI and the industry reacted with shock and anguish over the turn of events that could tarnish India’s corporate and raise vital issue like ethics, corporate governance and accounting and business practices.

• India to examine role of Satyam auditors, directors, Reuters Jan 7, 2009
• Centre to probe Satyam bungling, Times of India, Jan 8, 2009
• Tech Mahindra may evaluate telecom biz of Satyam, Business Standard, Jan 7, 2009

The international media has also given this story important coverage, going to the extent of questioning investor confidence in the Indian market.

• The Shame of Satyam Wall Street Journal, Jan 7, 2009
• Satyam Accounting Scandal Erodes Confidence in India Equities, Bloomberg, Jan 7, 2009
• Satyam Chief Admits Huge Accounting Fraud New York Times, Jan 7, 2009

This is a very bad news for the Indian IT industry which has already been seriously affected by the global economic slowdown. It is also a bad news for the UPA government since it will lower investor confidence and add to the recession gloom in the election year.

January 7th, 2009 | Tags: Election Issue : Economy, Indian Economy, Ramlinga Raju, Satyam | Category: Economy, Elections | Leave a comment

Continuing with it’s solutions to India’s economic crisis, the UPA government today unveiled the second stimulus package. Provisions included simplifying foreign borrowing rules for firms in the infrastructure and real estate sectors, and raising the foreign investment limit in corporate bonds to $15 billion.The Government also said it was preparing to recapitalize state-run banks to the tune of 200 billion rupees ($4.1 billion).

This was preceded with the Reserve Bank if India (RBI) cutting key rates.

• Govt unveils second stimulus package, Indian Express, Jan 2, 2009
  

PM Manmohan Singh recognizes the enormity of this issue and it’s impact on the coming elections.

• Next fiscal likely to be more difficult: PM, Economic Times, Jan 3, 2008

Times of India is reporting through it’s sources in Congress that the government is planning to pump in Rs 10,000 crores (Rs 100 billion) in the next hundred days to give a boost to the Indian economy in time for coming Lok Sabha  elections.

• Congress’s latest spin: Rs 1 lakh crore in 100 days, Times of India, Jan 5, 2009,

January 3rd, 2009 | Tags: Dr. Manmohan Singh, Economy, Election Issue : Economy, UPA government | Category: Dr. Manmohan Singh, Economy, Elections, UPA/Congress | Comments (2)

The exchange of words between the Indian and Pakistani governments after the Mumbai attacks has gotten louder and more stringent with reports of escalating tension between the two. While the UPA government has categorically denied that it has any plans of attacking Pakistan, the Pakistan establishment and media have been making opposite statements. The Prime Minister, today, expressed concern at this escalating tension and hinted at the possibility of a war.

• Nobody wants war but situation worrisome: PM, NDTV.com, Dec 23, 2008
• India to Pak: Don’t create war hysteria, Times of India, Dec 23, 2008
• No one wants war, says Prime Minister, Hindustan Times, Dec 23, 2008

• War talk reaches fever pitch in Pak media, Times of India, Dec 22, 2008
• We are prepared to defend ourselves: Pak, Press Trust of India, Dec 21, 2008

The Pakistani government has asked India for proof that the perpetrators of the Mumbai attacks were Pakistani. But when provided with the proof, Pakistan has denied it’s validity. The US government has made statements agreeing with India that Pakistan is behind the attacks.

• Pak has enough proof to act against suspects: India, Indian Express, Dec 22, 2008
• No firm evidence on JuD’s involvement in Mumbai attacks: Pak, Economic Times, Dec 23 2008
• Mumbai attack: US backs proof of Pak hand, Times of India, 23 Dec 2008
• FBI completes probe in Mumbai attack; indicates Pak role, Zee News, Dec 23, 2008

War in a election year with recession looming large is not something that Indians are looking forward to. The UPA government is caught in a bind as to take a tough stand against Pakistan, even going to the extent of a full blown war that may cause great loss to Indian lives and economy or to try and apply international pressure on the Pakistani government to deal with the perpetrators of the Mumbai attacks.

After the results of recent state elections, the UPA government has gone with the latter option. Unfortunately, it doesn’t appear to be giving immediate results. Pakistani government has denied that the terrorists were it’s nationals and has not taken any strong steps in building trust with it’s Indian counterpart. The international community, apart from giving strong statements, have not taken any strong actions against Pakistan. Notice the lack of any economic sanctions against Pakistan.

• India gets the world together, ups pressure on Pak IBNLive.com, Dec 23, 2008
  
• China still reluctant to pressurise Pak against terrorism, Times of India, Dec 23, 2008
• Dragon dances with terror, Economic Times, Dec 23, 2008

National Security is going to be a major issue in the coming elections and the UPA recognizes this. Though it has made a start with the set up of a National Investigating Agency and the amendment of UAPA (or the anti-terror law), it’s dealings with Pakistan has so far allowed it’s detractors to accuse it of going soft on terror. May be the PM can take a leaf out of ex-PM Vajpayee’s book in the way he dealt with Pakistan in 2001 after the attacks on Indian parliament.

December 23rd, 2008 | Tags: Dr. Manmohan Singh, Election Issue : Internal Security, India Under Attack, Maharashtra, Mumbai, pakistan, Terrorism, War | Category: Dr. Manmohan Singh, Economy, Elections, Jammu and Kashmir, Maharashtra, National Security, Terrorism, UPA/Congress | Comments (3)

Inflation dipped to below 7% bringing some cheer to the weary Indian economic scenario. This dip is attributed to the lower oil prices, with the oil selling for less than $40 a barrel - a four year low. Government’s decision to reduce petrol prices in the country also appear to have helped reduce inflation.

• Falling inflation points to lower interest rates, The Hindu, Dec 19, 2008
• Inflation dives to 9 month low of 6.84%. Hindustan Times, Dec 19, 2008
• Crude plunges on US economy, The Economic Times, Dec 19, 2008

However, price of essential commodities like grains and vegetables is still higher than it was last year. So, the effect of the lower inflation has to still reach the common people.

• Okay… but it’s not enough., Hindustan Times, Dec 19, 2008
• Inflation retreats; now address growth, Economic Times, Dec 19, 2008

The UPA government, with the help of the Reserve Bank, has been working to address the challenges of this economic downturn. But even they admit that the going is only going to get tougher.

• Next year to be more challenging: RBI, The Economic Times, Dec 19, 2008
• Govt confident of economy bouncing back next fiscal, Hindu Business Line, Dec 18, 2008
  

Falling price index is a good news for the UPA government as it should help in it’s re-election bid.

December 19th, 2008 | Tags: Economy, Election Issue : Economy, Indian Economy, Inflation, UPA government | Category: Economy, Elections | Leave a comment