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India unwrapped: Fuel prices, bypoll losses add to BJP’s woes; biz czars in a fix
Photo Credit: Reuters

If the ruling Bharatiya Janata Party (BJP) was hoping for a reprieve after the humiliation of bowing out in Karnataka minutes before a trust vote, the past week only brought more political disappointment.

Prime Minister Narendra Modi's party put up a dismal show in the Lok Sabha and Assembly bypolls that took place earlier this week. The BJP managed to win just one out of the four Lok Sabha seats and one of the 11 Assembly constituencies for which results were announced on Thursday.

Significantly, the ruling party lost the Kairana Lok Sabha seat in Uttar Pradesh, just months after tasting defeat in Gorakhpur - the bastion of chief minister Yogi Adityanath.

The sole consolation came from Palghar in Maharashtra, where the party was pitted against long-time ally Shiv Sena, with whom it has had a frosty relationship in the recent past.

Fuel to the fire

Given these political setbacks, it would not be surprising if the Modi government opts for some populist measures ahead of the 2019 general elections.

These include asking state-owned upstream oil companies such as ONGC and Oil India to take a hit on crude in order to keep the retail prices of diesel and petrol, which touched new highs this week, in check.

While a subsidy-sharing mechanism will hurt India’s oil explorers, the government will hope that bringing down fuel prices will help turn its political fortunes around.

Left-ruled Kerala on Thursday decided to cut taxes on fuel, effectively bringing down the retail price of oil and diesel by Re 1.

The Modi government has to delicately balance its fiscal math and can ill-afford to cut taxes, especially given the fact that at Rs 94,000 crore, its indirect tax collections for May under the Goods and Services Tax (GST) regime were lower than the numbers in April when the figure had crossed the Rs 1 lakh crore mark. That said, finance secretary Hasmukh Adhia claimed that the taxes collected were higher than the average monthly collections for 2017-18.

Corporate czars in trouble

PM Modi is not the only high-profile individual who needs to worry about keeping his job.

ICICI Bank, the country’s second-largest private sector lender, has instituted an independent probe against its chief executive officer, Chanda Kochhar, in light of fresh allegations that she breached the bank’s code of conduct.

Kochhar, her businessman husband Deepak and his brother Rajiv are already being probed by both the Central Bureau of Investigation (CBI) and the Securities and Exchange Board of India (SEBI) for alleged quid-pro-quo deals involving Videocon promoter Venugopal Dhoot.

The CBI has another prominent corporate czar in its cross hairs as it launched a probe against AirAsia India and the airline’s global chief Tony Fernandes for allegedly fraudulently obtaining overseas flying permits in partnership with the Tatas under the country’s Foreign Direct Investment (FDI) policy.

Even as AirAsia faced the heat, the government's divestment plans hit turbulence as state-owned airline Air India found no suitors despite the deadline for bids being extended.

Several competing local and foreign airlines including IndiGo were expected to bid for the debt-laden national carrier.

The government said that it would review its offer to hive off the unprofitable carrier, in which it wants to give up 76% stake.

Several protests

Even as the economy grew at a healthy 7.7% for the fourth quarter of 2017-18, the government needs to contend with another headache. It stares at the prospect of as many as 30,000 jobs being lost, and a disruption in the supply of copper, after the Vedanta Group-owned Sterlite plant in Tamil Nadu's Tuticorin was shut down following protests that left more than a dozen dead.

The locals have long been demanding that the plant, which produces 40% of India’s copper, be shut down as the pollution it causes leads to fatal diseases such as cancer.

The week also saw as many as 10 lakh employees of state-run banks go on a two-day strike demanding higher salaries. But the Modi government may have to face a bigger problem in the coming week as farmers across the country have gone on a 10-day strike demanding loan waivers. If the strike does succeed in having an impact, it could send vegetable prices soaring across the country.

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