'Modi's Concerned About India's Economic Vulnerabilities'

'...especially pressure on the rupee, the current account deficit, and foreign exchange outflows.'
'The key question over the next several months is whether the government can prevent external turbulence from feeding into domestic economic pessimism.'

"GDP numbers get too much airtime in India's economic debate; if one looks under the hood, it is clear that the party has struggled to translate to make good on its economic promises," notes Milan Vaishnav, Director and Senior Fellow, South Asia Programme at the Carnegie Endowment for International Peace.

"After 12 years in power in Delhi and now in charge of 22 states, the party can only evade responsibility for so long. At a certain point, it becomes harder to shift responsibility elsewhere," Dr. Vaishnav tells Rediff's Archana Masih discussing how the BJP has amassed political power unseen since the heyday of the Congress, the potential warning signs for the party and why the Bengal victory is being seen as a 'political earthquake'.

In what way will BJP's convincing victory in West Bengal and Assam reshape India's political landscape where the party or its coalitions already govern 22 states?

The Bengal victory has been described as a political 'earthquake', and I do not think that this is an overstatement.

West Bengal had long been viewed as one of the last major Opposition bastions capable of resisting the BJP's expansion. That is no longer the case. The BJP won more than two-thirds of the assembly's 294 seats, ending fifteen years of Trinamool Congress rule.

The reasons for the BJP's obsession with winning West Bengal are multiple. It holds 42 seats in the Lok Sabha, making it one of India's most electorally significant states. The state was led by Mamata Banerjee, one of Modi and the BJP's most vocal opponents.

Bengal also carries deep cultural and religious significance for Hindu nationalism given it was the birthplace of leading Hindu spiritual and political figures. Politically, a victory there also helps re-establish an aura of inevitability around the BJP's coast-to-coast dominance after the setbacks and questions raised by the 2024 Lok Sabha election.

With 22 states in its kitty, the BJP and its allies have amassed a concentration of political power not seen since the heyday of the Congress in the early decades after Independence.

If there was any doubt about the resilience of the 'fourth party system' in the wake of the BJP's sub-par performance in the 2024 general elections, these elections have largely put them to rest.

While the BJP's transformation of Assam into a core electoral bastion has not received the same level of attention as its breakthrough in West Bengal, it is nevertheless a significant political development.

This was a state long anchored by the Congress, and the latter was dealt a very tough blow in the 2026 assembly elections -- notching fewer than 20 seats in an assembly of 126 members.

This kind of dominance suggests the BJP has succeeded in transforming what was once a frontier state into part of its core.

It also bears repeating that the BJP leaned heavily on the state machinery, especially in West Bengal. The unprecedented deployment of paramilitary forces and the Election Commission's controversial Special Intensive Revision (SIR) of the electoral rolls contributed to an atmosphere of polarisation on the ground that was difficult to miss.

The broader point is not simply about the arithmetic of voter deletions or margins of victory, but about the changing modalities of BJP electoral mobilisation. As Neelanjan Sircar has argued, while the BJP may rely less on Modi's personal charisma than it once did, it has increasingly substituted institutional and state power for the mobilisational force traditionally embodied by its leader.

The verdict has breached the long-coveted fort in the East for the BJP and no doubt consolidates Mr. Modi's position. Yet, despite that, are there are any warning signs that could threaten the BJP's electoral dominance in times to come?

There are three headline warning signs for the BJP, if you want to look at the potential vulnerabilities the party faces.

The first pertains to structural economic vulnerabilities; persistent price rise (inflation), jobless growth, sluggish private investment, real wage stagnation, and the deepening of a 'K-shaped' recover remain unresolved challenges.

The GDP numbers get too much airtime in India's economic debate; if one looks under the hood, it is clear that the party has struggled to translate to make good on its economic promises.

After 12 years in power in Delhi and now in charge of 22 states, the party can only evade responsibility for so long. At a certain point, it becomes harder to shift responsibility elsewhere.

Indeed, the gap between the government's macroeconomic narrative and many voters' lived experiences likely contributed to the BJP's weaker-than-expected performance in the 2024 Lok Sabha election.

Those underlying pressures, while perhaps swept under the rug or displaced by other salient political issues, have not disappeared.

Second, the BJP still faces meaningful geographic limits to its expansion, especially in southern India. Despite making important headway in Kerala -- the NDA garnered a combined vote share of around 15 per cent -- the BJP's electoral footprint in Tamil Nadu, Kerala, Telangana and Andhra Pradesh, remains limited.

This matters because the BJP's national dominance still depends disproportionately on the Hindi belt and western India. No doubt, its eastern expansion helps compensate for southern weakness, but only partially.

In this respect, the BJP's inability to strike an alliance with Vijay's TVK in Tamil Nadu -- especially when the Congress succeeded in doing so -- was seen as a setback.

Third, there is the question of succession. While the party has managed to move beyond the 'Modi magic' alone in state elections, he still remains the party's best asset.

As of now, there is no clearly established successor waiting in the wings, and the concentration of authority at the top has created questions about the quality of the party's second-tier leadership.

Especially in states in the Hindi heartland with longstanding BJP governments -- like UP, Madhya Pradesh, Rajasthan, Haryana -- can the BJP face voter fatigue in future, considering three incumbent governments have lost in this latest round of state elections -- Bengal, Kerala and Tamil Nadu?

I do think that, Assam notwithstanding, there was an undercurrent of anti-incumbency in these assembly polls. Three of the four states -- Kerala, Tamil Nadu and West Bengal -- voted out their incumbent governments.

In West Bengal, a decade-and-a-half of TMC rule generated voter fatigue, made worse by endemic corruption, the criminalisation of politics, and economic drift.

In Tamil Nadu, voters expressed frustration with the two-front duopoly fronted by the DMK and AIADMK, which created space for the emergence of the TVK as a disruptive force.

And in Kerala, the LDF's second consecutive term ended in defeat.

The broader lesson is that incumbency remains a meaningful vulnerability in Indian politics, even in an era of BJP dominance. The BJP has benefited enormously from the 'double-engine sarkar' pledge -- the idea that alignment between state and Central governments accelerates development and improves governance.

But that argument also raises voter expectations. If the 'double-engine' does not deliver results on the ground, there could be an electoral reckoning.

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What do you make of the prime minister's call to cut fuel consumption, wfh, avoid buying gold/cut foreign travel and reduce dependence. Does this appeal signal concern about tough economic conditions ahead? What challenges should we be bracing for in the coming months?

The backdrop to the PM's speech is important: This appeal was made in the context of the protracted Israel-Iran-US war and its impact on global oil markets.

India relies heavily on crude and petroleum products -- it imports upwards of 85 percent of its crude oil requirements -- and is also a major importer of gold, at the same time that dollar inflows have slowed considerably.

With India's current account deficit in the red for the third consecutive year, the pressure on the rupee and on India's external balances is real.

So, Modi's appeal reflects genuine concern about India's macroeconomic vulnerabilities, especially pressure on the rupee, the current account deficit, and foreign exchange outflows.

In India's case, geopolitical headwinds compound pre-existing conditions: Persistent inflation, slow private investment, and a jobs market that has not kept pace with labour demand.

In other words, the government is confronting both cyclical and structural challenges simultaneously.

The key question over the next several months is whether the government can prevent external turbulence from feeding into domestic economic pessimism.

What do you see as the road ahead for the TMC, DMK, Left and the combined Opposition after these setbacks?
With the defeat in Assam, has the Congress lost another state where it was in a straight fight with the BJP -- and out of its political sphere after losing successive elections?

These elections do not bring good tidings for the Opposition INDIA alliance, which was always more a tactical arrangement than a coherent coalition.

Two of the alliance's key anchors -- the Trinamool Congress and the DMK -- have fallen by the wayside, with serious questions being asked about their futures.

The Congress managed to win back Kerala, but it was a non-entity in the other states, under-performing even its own limited benchmarks i////////n Assam.

Assam is significant because it is one of the few remaining large states where the Congress is still directly competing with the BJP in a strictly bipolar contest.

This perpetuates a structural problem at the heart of the coalition. The Congress remains the largest anchor of the INDIA alliance, but one which few parties trust and most see as a vulnerability.

Prior to these assembly polls, cracks in the alliance were already visible. These results pry them open even further.

The core deficits of the alliance remain the same as they have ever been: Lack of organisational wherewithal, lack of unified leadership, and lack of ideological coherence.

Feature Presentation: Aslam Hunani/Rediff