The results of the crucial Bihar assembly elections are likely to leave a mark on more than just political futures in the Indian state. As Prime Minister Narendra Modi visits the United Kingdom from November 12 to 14, four days after the poll results are declared, the trip’s success could depend on which way the Bihar electorate votes.
A favourable verdict for the Bharatiya Janata Party-led National Democratic Alliance will predictably embolden Modi, enabling him to push further his agenda to ease the business climate for foreign investors in India. On the other hand, a defeat will take the shine off the trip.
The UK visit is being billed as an important milestone in the evolving bilateral relations between New Delhi and London, especially since an Indian prime minister is visiting Britain after a full decade. When Modi meets British Prime Minister David Cameron, he would undoubtedly want to present the image of a leader who has the support back home to push through investor-friendly legislation. This may not be possible in the case of an NDA loss in Bihar.
If the Janata Dal (United)-Rashtriya Janata Dal-Congress alliance is able to capture Bihar, as suggested by some poll surveys, an upbeat opposition is bound to become more aggressive and block the passage of key legislation in Parliament.
A united opposition has already forced the Modi government to abandon its controversial land acquisition bill, which was meant to make it easier for investors to purchase farmland for industrial and infrastructure projects. The ruling alliance has also failed to secure the passage of the Goods and Services Tax Bill, a critical element of the government’s reforms agenda. It has been passed in Lok Sabha but is stuck in the Rajya Sabha where the Modi government is in a minority.
Stuck legislation
Realising that he is falling back on his promise to improve the ease of doing business in India, Modi recently held out an assurance to foreign investors that economic reforms in India are well on track and that the GST Bill will be passed in 2016. At present, India ranks 142 on the World Bank’s ease of doing business index.
Speaking recently at a function in Bengaluru in the presence of German Chancellor Angela Merkel, Modi said, “We have introduced the GST bill in Parliament and we are hopeful of rolling it out in 2016. We want to make sure our tax regime is transparent and predictable. We are also keen to see genuine investors and honest taxpayers get quick and fair decisions on tax matters.”
For Modi, therefore, it has become imperative to succeed in Bihar. A win here will mean that his charisma still holds. But more importantly, it will push the opposition on the backfoot and give Modi the extra leverage to pursue his stalled reforms agenda.
Ever since he came to power more than a year ago, Modi has assiduously wooed foreign investors to kick-start the Indian economy by promising to end red tape and ease environmental clearances. He has maintained this pitch during his numerous trips abroad, repeatedly pointing out that his government has taken a series of steps which have improved the investment climate in the country with foreign direct investments going up by 40% over the past year.
Cameron’s charm offensive
Cameron, meanwhile, has evinced great interest in boosting trade ties between the two countries. Since his first stint as prime minister, he has visited India thrice, accompanied by large business delegations. Like other countries, Britain too wants a piece of the growing Indian market – it believes there is scope for enlarging its economic engagement with India especially in the areas of defence and infrastructure development.
While Britain and a host of other countries, including Germany, France and Japan, undoubtedly look upon India as a favourable investment destination, doubts still persist about the future of Modi’s economic reforms.
In the case of Britain, it is India which has been slow to respond to its overtures. Cameron’s charm offensive has not yielded results as Britain was unable to push through the deal for its Eurofighter Typhoon jets as India preferred the French Dassault Rafaele jets instead. India’s inability to move forward on FDI in retail is another area of disappointment as British supermarkets had hoped to expand their business in India.
The prime minister’s forthcoming visit is being viewed as an opportunity for India to reinvigorate its economic ties with Britain. However, domestic developments could impact this trip. The Bihar poll verdict will either allow an enthusiastic Modi to raise his sales pitch to foreign investors or it could end up diminishing his well-crafted larger-than-life image.
A favourable verdict for the Bharatiya Janata Party-led National Democratic Alliance will predictably embolden Modi, enabling him to push further his agenda to ease the business climate for foreign investors in India. On the other hand, a defeat will take the shine off the trip.
The UK visit is being billed as an important milestone in the evolving bilateral relations between New Delhi and London, especially since an Indian prime minister is visiting Britain after a full decade. When Modi meets British Prime Minister David Cameron, he would undoubtedly want to present the image of a leader who has the support back home to push through investor-friendly legislation. This may not be possible in the case of an NDA loss in Bihar.
If the Janata Dal (United)-Rashtriya Janata Dal-Congress alliance is able to capture Bihar, as suggested by some poll surveys, an upbeat opposition is bound to become more aggressive and block the passage of key legislation in Parliament.
A united opposition has already forced the Modi government to abandon its controversial land acquisition bill, which was meant to make it easier for investors to purchase farmland for industrial and infrastructure projects. The ruling alliance has also failed to secure the passage of the Goods and Services Tax Bill, a critical element of the government’s reforms agenda. It has been passed in Lok Sabha but is stuck in the Rajya Sabha where the Modi government is in a minority.
Stuck legislation
Realising that he is falling back on his promise to improve the ease of doing business in India, Modi recently held out an assurance to foreign investors that economic reforms in India are well on track and that the GST Bill will be passed in 2016. At present, India ranks 142 on the World Bank’s ease of doing business index.
Speaking recently at a function in Bengaluru in the presence of German Chancellor Angela Merkel, Modi said, “We have introduced the GST bill in Parliament and we are hopeful of rolling it out in 2016. We want to make sure our tax regime is transparent and predictable. We are also keen to see genuine investors and honest taxpayers get quick and fair decisions on tax matters.”
For Modi, therefore, it has become imperative to succeed in Bihar. A win here will mean that his charisma still holds. But more importantly, it will push the opposition on the backfoot and give Modi the extra leverage to pursue his stalled reforms agenda.
Ever since he came to power more than a year ago, Modi has assiduously wooed foreign investors to kick-start the Indian economy by promising to end red tape and ease environmental clearances. He has maintained this pitch during his numerous trips abroad, repeatedly pointing out that his government has taken a series of steps which have improved the investment climate in the country with foreign direct investments going up by 40% over the past year.
Cameron’s charm offensive
Cameron, meanwhile, has evinced great interest in boosting trade ties between the two countries. Since his first stint as prime minister, he has visited India thrice, accompanied by large business delegations. Like other countries, Britain too wants a piece of the growing Indian market – it believes there is scope for enlarging its economic engagement with India especially in the areas of defence and infrastructure development.
While Britain and a host of other countries, including Germany, France and Japan, undoubtedly look upon India as a favourable investment destination, doubts still persist about the future of Modi’s economic reforms.
In the case of Britain, it is India which has been slow to respond to its overtures. Cameron’s charm offensive has not yielded results as Britain was unable to push through the deal for its Eurofighter Typhoon jets as India preferred the French Dassault Rafaele jets instead. India’s inability to move forward on FDI in retail is another area of disappointment as British supermarkets had hoped to expand their business in India.
The prime minister’s forthcoming visit is being viewed as an opportunity for India to reinvigorate its economic ties with Britain. However, domestic developments could impact this trip. The Bihar poll verdict will either allow an enthusiastic Modi to raise his sales pitch to foreign investors or it could end up diminishing his well-crafted larger-than-life image.
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