Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) would like to forget the week gone by in a hurry.
The BJP had barely recovered from the disaster in Karnataka, where BS Yeddyurappa resigned on 19 May as the chief minister in less than 60 hours after failing to muster enough numbers, when another tragedy hit neighboring Tamil Nadu. The party faced nationwide criticism for tacitly supporting the Tamil Nadu government’s police action in Tuticorin, against protesters opposed to Vedanta Ltd’s copper smelter in the area, which left 13 people dead.
And as if the ignominy of ceding the Karnataka chief minister’s post to Janata Dal (Secular)’s HD Kumaraswamy wasn’t enough, latest opinion polls suggested that the BJP was trailing its arch rival in the key states of Rajasthan and Madhya Pradesh that go to polls later this year.
Little wonder, then, that the opposition was upbeat, as its top leaders including Congress president Rahul Gandhi and his mother Sonia Gandhi, West Bengal chief minister Mamata Banerjee, Bahujan Samaj Party supremo Mayawati and Delhi chief minister Arvind Kejriwal made a show of strength at Kumaraswamy’s inauguration.
But the issue that the BJP should perhaps be most worried about ahead of the 2019 general elections is that of fuel prices, which have been rising unabated ever since the elections in Karnataka ended, touching all-time highs.
To be sure, it’s the rise in global price of crude that is to blame for the increase in retail prices of petrol and diesel, for worsening India’s current account deficit, and for weakening of the rupee against the US dollar. But it is equally true that central and state taxes account for a lion’s share of the final retail price of fuel.
It is for that reason that the BJP is under pressure to cut taxes, especially because it now rules most of the large states directly or with coalition partners. But with a stretched fiscal situation, the central government and the states will not find it easy to cut back on taxes.
Even as it gets ready to firefight the embers coming from rising oil prices, the government’s regulators and law enforcement agencies seemed to show some alacrity, especially when dealing with alleged banking frauds.
For one, the capital markets regulator Securities and Exchange Board of India issued an adjudication notice against ICICI Bank and its chief Chanda Kochhar in a case related to allegations of quid-pro-quo involving her husband Deepak Kochhar, his brother Rajiv Kochhar and Videocon group chief Venugopal Dhoot.
Separately, the Enforcement Directorate filed charges in the Rs 13,000 crore Punjab National Bank (PNB) fraud case involving diamond merchants Nirav Modi and his uncle Mehul Choksi, who are both on the run outside India.
This, even as bad loans and big-ticket frauds pushed government-owned banks, led by PNB and the State Bank of India, deeper into losses. In fact, total losses by 15 state-run banks that have declared quarterly results thus far crossed Rs 50,000 crore for the fourth quarter. This is four times the figure during the third quarter and puts into question whether the government’s Rs 2.11 trillion bailout plan, announced in October last year, will be enough.
In fact, credit ratings firm Moody’s downgraded PNB and said the bank will need Rs 12,000-13,000 crore more in 2018-19 to meet its regulatory capital requirements.
Amid all the gloom, PM Modi found time to dash across to Sochi in Russia for an “informal” summit with the country’s president Vladimir Putin, making it his second such visit after he had a similar meeting with the Chinese leader Xi Jinping. Modi also met Bangladeshi PM Sheikh Hasina on Friday, and is set to visit Indonesia and Singapore in the coming week.