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<ul class="generic-article__summary--ul content--ul"><li class="generic-article__summary--li content--li">The BJP’s Narendra Modi swept to power on a wave of optimism and a catchy slogan.</li><li class="generic-article__summary--li content--li">Five years on, an economic slowdown, agrarian distress and rising intolerance have soured the mood</li></ul> India has been holding its general elections in stages since April 11. The seventh and final phase will take place on Sunday. The primary contest is for the 543 seats in India’s lower house of parliament, the Lok Sabha. This is one of the largest democratic exercises in the world, with 900 million voters deciding on a new central government for the 1.3 billion-strong South Asian giant. The results are expected on Thursday. Indian Prime Minister Narendra Modi shows his ink-marked finger after casting his vote. Photo: AFP WHAT IS AT STAKE? Prime Minister <a href="https://www.scmp.com/topics/narendra-modi" class="link-text">Narendra Modi</a> of the Hindu nationalist Bharatiya Janata Party (BJP) is running for a second term.A former chief minister of Gujarat, he came to power in 2014 with the simple but powerful slogan “ache din aayega” (good days will come). This resonated with voters – especially in the impoverished northern regions – who were angry at the previous administration of the Congress party that had been dogged by scandal. <h3 style="margin-bottom: 2.35714rem; font-variant: inherit; font-weight: 300; font-stretch: inherit; font-size: 1.71429rem; line-height: 2.42857rem; font-family: Roboto, sans-serif; vertical-align: baseline; display: inherit;"><a href="https://www.scmp.com/week-asia/politics/article/3010707/india-elections-bjp-may-need-allies-narendra-modi-drove-away" class="link-text">BJP may need the allies Modi drove away </a></h3>As a result, Modi swept to power: the BJP-led National Democratic Alliance coalition won 336 of the Lok Sabha’s 543 seats. The BJP itself won 282 seats – the first time since 1989 that one of India’s political parties had won an outright majority. The other main national political party is Congress, led by Rahul Gandhi, grandson of former prime minister Indira Gandhi. This grand old party of India has been progressively weakening across the country and now stands as only one of the many opposition parties, jockeying for power against resurgent regional players. In 2014, Congress did not even win enough seats to be chosen as the official opposition and was almost eclipsed by the AIADMK, a regional party from Tamil Nadu. SO MODI’S A SHOO-IN? Not exactly. Modi’s re-election prospects have arguably been dimmed by the triple threat of an economic slowdown, agrarian distress and concerns about rising intolerance and violence against minorities. His promise in 2014 to create 10 million new jobs a year for India’s burgeoning youth population has not been fulfilled. Moreover, a recent study by the Centre for Monitoring Indian Economy argued that 11 million jobs were lost last year alone. Indian farmers protest in New Delhi in November – their plight has become a major electoral issue. Photo: AP A leaked government survey allegedly showed the unemployment rate to be higher than at any time in the past 45 years. These economic doldrums have largely been blamed on the new Goods and Services Tax imposed by the government and 2016’s botched demonetisation exercise, which took 86.5 per cent of India’s currency out of circulation. The plight of India’s farmers has also become a major electoral issue. Stagnant grain prices, erratic weather and unresolved systemic problems have led to an alarming number of farmer suicides in a country where more than 50 per cent of the population is employed in agriculture. In 2017, the central government told the Supreme Court that 12,000 farmers had committed suicide every year since 2013. The BJP’s use of Hindu nationalist rhetoric, meanwhile, has always been controversial. Its leaders, like the monk-turned-Uttar Pradesh chief minister Yogi Adityanath, have been accused of using anti-Muslim rhetoric. BATTLEGROUND STATES The outcome of India’s elections often depends on political calculations and issues at the state level. India’s 29 states are highly diverse, both linguistically and ethnically. Five of these states – Uttar Pradesh, Bihar, Maharashtra, West Bengal and Tamil Nadu – each send more than 40 MPs to the Lok Sabha, meaning that winning them is essential for either side. The biggest prize among them is Uttar Pradesh, which is one of India’s largest states and has 80 MPs. In 2014, the BJP was largely able to win nationally because it made huge gains in the massive northern state, taking 71 of the seats that were up for grabs. <h3 style="margin-bottom: 2.35714rem; font-variant: inherit; font-weight: 300; font-stretch: inherit; font-size: 1.71429rem; line-height: 2.42857rem; font-family: Roboto, sans-serif; vertical-align: baseline; display: inherit;"><a href="https://www.scmp.com/week-asia/politics/article/3010546/communism-india-dead-or-just-waiting-young-saviours" class="link-text">Communism in India: dead or just waiting for young saviours? </a></h3>This time, however, two major local players – the Samajwadi Party (SP) and the Bahujan Samaj Party (BSP) – are challenging the BJP. Both the SP and BSP – which have formed an alliance – are strong with the crucial Yadav and Dalit (formerly known as untouchable) castes in the state. While both the SP and BSP won more than 40 per cent of the popular vote in Uttar Pradesh in the last elections, the SP won only five seats because of India’s first-past-the-post electoral system and its lack of an alliance. This time, some pundits expect the SP-BSP alliance to win at least half of the 80 seats on offer, if not more. The BJP’s prospects are also being put to the test in the country’s economically dynamic south, where powerful regional parties are challenging its grip on power. In the states of Andhra Pradesh and Telangana, the regional YSR Congress Party and the Telangana Rashtriya Samithi are expected to sweep the polls. Both have openly said that they prefer a third option for government that does not involve either the BJP or Congress. In India’s southernmost state and its automotive hub, Tamil Nadu, the socialist, Tamil-nationalist Dravida Munnetra Kazhagam seems to be on the cusp of major gains because of anger at both the BJP central government and its local allies, the AIADMK. The BJP is also at risk of shedding seats in the central and western states of Madhya Pradesh, Chhattisgarh and Rajasthan, where Congress made gains during recent state elections. However, Modi’s party is expected to make nominal gains in eastern India, in states such as Orissa, West Bengal and the seven states that make up the country’s northeast. A major concern in those areas has been allegations of illegal migration from Bangladesh, and the BJP is running a racially charged campaign – playing up local fears of Muslim refugees – to capitalise on this. WHAT WILL ALL THIS MEAN? Assuming the BJP loses ground to regional parties, and the Congress retains its meagre base, India might find itself with a virtually hung parliament. For instance, the BJP and its National Democratic Alliance coalition might be the largest bloc in the Lok Sabha, but still fall short of a majority. <h3 style="margin-bottom: 2.35714rem; font-variant: inherit; font-weight: 300; font-stretch: inherit; font-size: 1.71429rem; line-height: 2.42857rem; font-family: Roboto, sans-serif; vertical-align: baseline; display: inherit;"><a href="https://www.scmp.com/week-asia/opinion/article/3009682/exploiting-islamophobia-election-winning-tool-india" class="link-text">Exploiting Islamophobia: an election-winning tool in India </a></h3>Regional parties have also been displaying unprecedented acts of solidarity, such as joint rallies featuring all the leaders of large local opposition parties, encouraging the possibility of a non-Congress, non-BJP “third-front” government. So, while the results are far from certain, 2019 might well herald a return to form and the politics India knows best: the proliferation of regional power brokers and complex coalition governments.

The Indian election, explained: how Narendra Modi’s ‘good days’ turned bad

Ever since the <keyword id="6354477" type="PERSON" weightage="100" keywordseo="Narendra-Modi">Narendra Modi</keyword> government took office, there has been an air of expectation in the country. Even the IMF and the World Bank expected a turnaround, predicting a growth rate of 6.4% in 2015. But a survey, which was conducted by the <keyword id="259702" type="ORGANIZATION" weightage="100" keywordseo="Labour-Bureau">Labour Bureau</keyword> during <keyword id="6355364" type="ORGANIZATION" weightage="100" keywordseo="UPA">UPA</keyword>’s regime, paints a sorry picture of the state of <keyword id="6358907" type="ORGANIZATION" weightage="100" keywordseo="unemployment">unemployment</keyword> in the country. 
 The latest survey conducted by the Labour Bureau has revealed that the rate of un<keyword id="6355127" type="ORGANIZATION" weightage="100" keywordseo="employment">employment</keyword> in the country had increased to 4.9% in FY 2013-14. The major factor behind this rise was increase in unemployment in rural areas in spite of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme. In FY 2012-13, the unemployment rate was 4.7%. 

	Despite the fact that MGNREGA was beneficial to 93% households in rural areas, the rate of unemployment went up to 4.7% in FY2013-14 from 4.4% in the preceding fiscal. However, the rate of unemployment in urban areas declined to 5.5% in FY2013-14 from 5.7% in the previous year. 
 

	Unemployment rate among men rose to 4.1% from 4%, and among women, it grew to 7.7% from 7.2%. 
 

	About 49.5% people are self-employed, 30.9% are casual labourers, 16.5% salary earners and the remaining 3% are employed as contractual workers.
 

	Gujarat had the lowest rate (1.2%) of unemployment in the country, while the northeastern state of Sikkim registered the highest rate.
 

	As many as 1,36,395 households were surveyed by the Labour Bureau, out of which 83,385 were in rural areas and 53,010 in urban areas.
 

	Although the survey was conducted during the UPA regime, it now remains to be seen how Narendra Modi delivers on his promise of ‘ache din’ as far as employment is concerned.

Will Modi’s ‘Ache Din’ Act As A Game-changer
For The Unemployed?

With the <keyword id="2549811" type="UNKNOWN" weightage="20" keywordseo="Budget-2015">Budget 2015</keyword> around the corner now, real estate developers are keeping their fingers crossed for Modi’s government to announce policy reforms that will change the dynamics of the industry. 
 
Industry players have commonly voiced that the government must announced reforms to cut down on the bureaucratic red tape involved in project development. “Expedited clearances for a larger segment of residential projects will be a key for reducing project delays. An announcement that streamlines the process of obtaining clearances will go a very long way in boosting the real estate industry,” said Anil Pharande, chairman and managing director of Pharande Spaces. 
 
The current scenario 
 According to Rohit Gera, managing director of <keyword id="639898" type="PERSON" weightage="20" keywordseo="Gera-Developments">Gera Developments</keyword>, the realty sector has been under stress as the sector is a highly capital intensive business, with a major portion of the residential segment being financed through customer sales proceeds. “Developers therefore do their budgeting with this assumption and therefore, for the most part, finance costs on construction of the project are not factored in the proforma profit calculations. As a result, when sales are slow as they have been, developers (who have access to construction finance) are forced to borrow and the interest costs eat into profitability,” said Gera. 
 
He further added that in the past few years, the construction costs have surged “This gets further compounded when construction costs rise more than the increases in the sale prices of the apartments. In 2009, in spite of the continuing negative sentiment based on the global meltdown, the UPA re-election led to an instant impact to the stock and real estate markets. This time however, even though the mandate has been far more decisive, the real estate segment has not seen the turn in customer sentiment and purchase. I believe this is because people are waiting to actually see the benefits to their pockets of the ache din promise by the government,” noted Gera. 
 
Pre-budget expectations 
 Industry experts have suggested that the government will have to take several measures to improve the sentiment in the <keyword id="6543013" type="UNKNOWN" weightage="20" keywordseo="real-estate-sector">real estate sector</keyword>. Apart from reducing the red tapism that mars the industry, realty developers expect the government to take steps to regulate the construction material costs. 
 
Reiterating Gera’s concerns, industry players have emphasized that the government has to regulate the rising prices of raw materials such as cement and steel as they have adversely impacted the input cost of a project. “The costs of raw materials such as cement and steel need to be brought down or an upper ceiling imposed on their prices,” stated Pharande. 
 
Apart from regulating the input cost of a project, industry players have also suggested that Union Budget 2015-16 should address the tax issues in the sector. In what could be a relief for the home buyers, the developers have recommended the government to remove multiple taxes such as VAT and service tax along with stamp duty and registration charges while purchasing a house. “Stamp duty and registration costs are as high as 6% in most cases, and this needs to be reduced by a few base points to aid consumers. Alternatively, a slab-based approach should be introduced. Stamp duty falls under state government purview, but the Center can nevertheless issue a directive to reduce stamp duty costs. Also, Goods and Service Tax (GST) should be introduced in the place of these taxes,” said Kishore Pate, chairman and managing director of Amit Enterprises Housing Ltd. 
 
Raising the issue of ambiguity in the functioning of the real estate sector, builders have recommended the government should implement the Real Estate Regulatory bill, which will bring in an apex body in the sector, which is expected to address concerns with transparency. 
 
The credit challenge 
 
Real estate players have time and again asserted that realty sector is a capital intensive sector and raising finance for newer projects has been a challenge. With the budget 2015 soon to be announced, industry players are hoping that the government will be more pro-active in facilitating credit availability for the industry. 
 
“The budget needs to do something to bring down the cost of borrowing for developers, because raising capital for development of new projects remains a huge challenge. Lending rates for real estate development currently range between 12% to 14%, and raising funds through other sources is even more expensive. The interest rates on lending to real estate developers should be brought down so as to help rationalize the cost of construction. This would also help in bringing down property prices,” said Arvind Jain, managing director of Pride Group. 
 
Talking about higher interest rates that have dampened the consumer sentiment in the past few years, Jain noted, “We real estate sector was cheered by the recent cut in interest rates, but it was by itself not sufficient to amount to any real advantage to home buyers. The Union budget should bring a significant decrease in interest rates on home loans. The Ministry for Urban Development and Housing had made it clear that it would maintain a sharp focus on reducing home loan interest rates, and the budget will hopefully bring firm evidence of this focus. Developers, home buyers and banks are all keenly awaiting such an announcement, which would bring with it a significant revival in sentiment”.

Budget 2015 Should Address Red Tapism, Multiple Taxes And Credit Availability For Realty Sector

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The Indian election, explained: how Narendra Modi’s ‘good days’ turned bad

SCMP

Will Modi’s ‘Ache Din’ Act As A Game-changer For The Unemployed?

Manish Kumar

Budget 2015 Should Address Red Tapism, Multiple Taxes And Credit Availability For Realty Sector

Purba Das

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