The battle for Bihar is over. The Grand Alliance decimated the BJP-led NDA, scoring a landslide two-thirds majority in the assembly polls. It secured 178 seats in the 243-member House — RJD: 80 seats, JD(U): 71 seats and Congress: 27 seats. The NDA secured 58 seats, with the BJP on its own securing 53 seats. Political analysts are now dissecting the reasons for the NDA's electoral defeat, and along with them economy watchers have come out with views on possible economic impact of the verdict. I think the NDA's defeat in the Bihar elections is unlikely to have any major negative implication on the economy.
Prior to the election results, some concerns surfaced that a NDA defeat may hit the government's reform agenda. It was pointed out that a victory would help the Centre to strengthen its presence in the Upper House where its legislative agenda has been repeatedly blocked. But the fact is that Bihar has 16 Rajya Sabha seats out of which four seats are currently held by the BJP, the other 12 being occupied by Janata Dal (United) MPs. Out of the total seats, five (all JD-U members) will fall vacant in 2016 and six in 2018 (four JD-U and two BJP members). So, a BJP win would have hardly helped clear the current RS logjam, though it is now clear that the NDA will get only one out of five Bihar Rajya Sabha seats in 2016 and one out of six seats in 2018.
In the backdrop of the Bihar defeat, industry experts have urged the Centre to give undivided focus on its economic agenda. According to a global financial house, the importance of the Bihar election is overstated and the incremental economic reforms are likely to continue irrespective of the verdict. According to some others, the elections verdict may even result in a better outcome for the future of economic reforms if the Centre takes this as a lesson that only sticking to the development agenda could help them win. I support these views, but at the same time I think the verdict should not be taken by the Opposition as a mandate to obstruct Parliament.
The PM recently said that the Indian economy is better placed today, with some major economic indicators, including GDP growth, foreign investment, current account deficit, fiscal deficit and revenue collection giving a better picture. There is no denial of this fact. In addition, control in corruption and sign of improvement in Doing Business raking are also positive developments. But there is still much to be done. Exports are down, quarterly corporate results are not showing uptick in sales, manufacturing is struggling, banks' NPA problem is still looming, and so on. Also, issues like power sector woes, bankruptcy norms and rail-road project development need to be adequately addressed.
I invite your opinions. I'd also like to take this opportunity to wish you all a happy and prosperous Diwali.
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