What does the Uttar Pradesh win mean for PM Narendra Modi and the Centre?


NEW DELHI: The thumping victory in Uttar Pradesh is expected to bolster the Narendra Modi government’s reforms push at the Centre with the newly acquired political capital being utilised to undertake hard policy changes.

Liberalisation of the foreign investment framework with a focus on local manufacturing, a thorough clean-up at debt-laden banks, improving the delivery systems in social sectors including education and health — these are expected to be key items on the agenda of a reinvigorated government.

The electoral verdict is seen as a ringing endorsement of demonetisation and a green signal for bigger and more disruptive reforms, with the goods and services tax (GST) being the biggest beneficiary.

What does the Uttar Pradesh win mean for PM Narendra Modi and the Centre?

“BJP’s landslide victory in assembly elections has again established that people of India want development as pushed by PM,” finance minister Arun Jaitley tweeted.

Prime Minister Narendra Modi’s November 8 demonetisation announcement had met with fierce political resistance on the grounds that the move — aimed at eradicating black money, fake notes and corruption — had caused hardship to people and stunted economic growth.

But the election results clearly show strong popular support for the move, experts said.

The government has a clear few months before the Gujarat election toward the end of the year to push contentious strategic sales of staterun companies, subsidy reforms and even land reforms.

GST is expected to get an easier passage in Parliament when the relevant legislation is introduced. The government wants to roll out this reform from July 1.

It has already worked out labour reforms through four codes and the government will now be emboldened to overlook the strong resistance to changes in this regard.

The bureaucracy sees a bigger reform push coming with this most crucial state election out of the way.

“This is a vote for good governance and growth with equity,” said Amitabh Kant, CEO, Niti Aayog. “India gets pulled down on the Human Development Index due to UP’s performance on key social indicators like health and education… This would top the agenda.”

Niti Aayog is emerging as the nerve centre of policy making and is expected to get busier after the election when the focus shifts back to administration after the lull during the campaign.

“This reinforces support for the reform agenda in the coming years,” said a senior government official. Officials see labour reforms, strategic sales, overseas investment, banking consolidation and the badloan clean-up being put on the fast track.

“This is a solid vote of confidence for demonetisation even though there was some inconvenience to people,” said another government official. “It would spur the government in taking bold decisions and implementation.”

Numbers in Rajya Sabha The Rajya Sabha, where the government currently lacks the numbers, could see a more conducive environment for the passage of key legislation with the opposition likely to be less obstructive after the electoral snub. “Our strength will increase in the Rajya Sabha,” BJP president Amit Shah said in a press conference on Saturday. This will follow as the BJP increases its tally in the state assemblies, which send members to the Upper House.

Indian industry is enthused by the development and sees a few months of uninterrupted reforms.

“By and large the results ensure that the process of reforms would gain further credence, support and momentum at the central level,” said CII president Naushad Forbes.

Rajiv Kumar, a veteran policy maker and economist, said the huge mandate is an opportunity for a radical restructuring of Uttar Pradesh.

“With this mandate, the government should complete restructuring of UP,” he said. “The state should be divided into five to bring about efficiency in governance.”