New Delhi: While the BJP is highlighting the Modi government’s achievements in the past four years and reaching out to the poorest of the poor, the party’s spin doctors seem worried over the economic slowdown that can adversely impact its performance in the 2019 Lok Sabha elections.
Besides continuous rise of fuel prices, some other economic factors worrying the BJP include a fall of 16 per cent in rupee’s value and slow job creation. These factors could also impact the party’s poll performance in Madhya Pradesh, Chhattisgarh and Rajasthan, currently under BJP rule, where Assembly polls are scheduled to be held later this year.
A recent report by India’s leading rating agency Crisil also highlighted the challenges being faced by the Modi government in the last year before the 2019 general elections as crude oil prices have once again started rising.
“A runaway rise in oil prices could stir the inflation scourge back to life and impact other macro indicators too. A back-of-the-envelope estimate shows every $10 per barrel increase in crude oil price can shore up India’s fiscal deficit by 8 basis points (bps) as a percentage of GDP and similarly the current account deficit by 40 bps,” said the latest Crisil report.
The agency has also warned that most of the problems plaguing the economy — be it in manufacturing, exports or agriculture/rural sectors — are structural in nature and can only be addressed through reforms.
It pointed out that employment challenges for the Modi government persist, as construction and manufacturing — which generate the most number of jobs among non-agriculture sectors — have underperformed. Lack of employment opportunities despite promises has turned out to be one of the potent ammunition with the Opposition against the government.
On the investment front, the rating agency said that despite government measure, a decisive push to the investment cycle remains elusive.
“Given excess capacity and corporate focus on improving capital structure, private sector investments remain sluggish. The political uncertainty due to impending general elections does not augur well for big-ticket private investments,” it said.
It pointed out that while government pushed “Make in India”, the share of manufacturing increased only by 0.8 per cent to 18 per cent in the last four years.
“The rural economy has been riddled with challenges including slower agriculturalgrowth, poor farm price realisation, slowdown in construction activity and sluggish ruralwage growth. An unhappy hinterland can turn out to be the proverbial Achilles’ heel for any government during elections,”” said the report.
