The BJP might be facing baptism by fire in the assembly elections in Prime Minister Narendra Modi’s home state Gujarat, with some predicting that a loss in this round ahead of the 2019 general elections would mean the Waterloo for the saffron leader.
But the betting world is firmly backing Modi to win hands down. According to one report, bookies have put bets worth Rs 1,000 crore on the Modi-led BJP’s victory in the forthcoming Gujarat elections.
The report said the going rates are Rs 1.25 for every Re 1 bet on a BJP win. The same stands at Rs 2 in the case of a Congress win.
CLSA’s Chris Woods, famed for his Greed and Fear Report, on Friday said the odds of the BJP winning the Gujarat election remains high.
Gujarat goes to poll in two phases, on December 9 and December 14. The results will be out on December 18.
The CLSA Managing Director and Equity Strategist, however, said should the BJP lose Gujarat, it might prove Modi’s Waterloo. “Modi will be finished in an event of the BJP’s loss in Gujarat,” he said.
Political analysts are cautious over a possible swing among Gujarat’s trading community in the wake of the cash ban and GST rollout.
But Wood said the opposition Congress created a strategic blunder in trying to fight the election on GST and demonetisation. The Congress should have fought Gujarat, not on national issues, but on local issues, he said.
Global rating agency Moody’s decision to upgrade India’s sovereign rating was seen as a shot in arm for the ruling party BJP to demonstrate that reforms it has taken over the three years of its reign are bearing fruits. But S&P poured cold water in it last Friday, by deciding to maintain status quo.
A recent survey by Pew suggested that neraly 83 per cent of the respondents were statisfied with the current state of economy, while 88 per cent of them held a favourable view of PM Modi.
Economists and market analysts say the outcome of Gujarat election would be crucial not just from the 2019 general election perspective, but also from a macro-economy perspective as it might influence the direction of India’s fiscal policies, they said.
Girish Pai of Nirmal Bang Institutional Equities says the key driver from here on could potentially not be earnings or even the 10-year yield, but politics.
“What happens in Gujarat elections would be very critical to what happens to fiscal deficit in FY19. If the BJP gets lesser seats than what it got in last elections, the budgets could be more fiscally impudent in a way to put it so,” he feels
The next budget onwards, there would be time when the government will get more and more populist, says Pankaj Sharma, an independent market expert.
“Whether the same kind of intensity with which the government is working with on containing the fiscal deficit and being more prudent about the spending be continue is what I am not very sure about,”Sharma said.
Nomura India in a recent note said that while Gujarat has been the BJP’s bastion for nearly two decades, it would be noteworthy to track. The brokerage said that as the election cycle approaching political considerations may play a more dominant role in driving economic decisions.