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Significance of Modi’s Increased Political Capital

The chief minister of the state of Bihar in India resigned from his post on July 26, and then was sworn in again on July 27. While 24 hours did not change Nitish Kumar’s status as Bihar’s chief minister, India’s Prime Minister Modi’s stature in Indian politics grew in a very significant way.

Since 2014, Modi’s political party the BJP (Bhartiya Janata Party) had been winning state election after state election in India. This came to a halt in Bihar in 2015 when Nitish Kumar, in alliance with another regional party defeated the BJP-led National Democratic Alliance (NDA). The weakened opposition had started seeing Nitish Kumar as the leader who could potentially challenge Modi in 2019. Even though Modi won the big state of Uttar Pradesh in March this year, Nitish still offered a glimmer of hope. That changed in July when Nitish’s party, the JDU (Janata Dal united), broke its ties with its original ally in Bihar, and joined hands with Modi’s BJP. So when Nitish Kumar took the oath of office again on July 26, the state chief of BJP - Sushil Modi- took oath of office as his deputy chief minister.

This development is highly significant for two key reasons:

Modi now has greater numbers in the Upper House (called Rajya Sabha) of India’s parliament. Even though he is still short of majority, this increased political capital should help him to get more reforms (such as the Land Acquisition Bill and labour reforms) approved. However, it is possible that Modi may not push forward these reforms prior to 2019. He has already implemented two significant reforms in the form of demonetization and GST and might wait for the economy to absorb these changes before bringing more significant changes.

Secondly, and as mentioned earlier, the one leader who could have given Modi a fight in his 2019 re-election bid has now become a political ally. Prominent Indian political commentators are now of the opinion that this development further smoothens Modi’s road to power in 2019[1]. This bodes well for India both in the short and the long term.

 

[1] In big win for Modi, Indian state leader teams up with his ruling BJP, Reuters, July 27, 2019

 

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Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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