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Can a populist Budget solve heartland woes?

After winning the assembly elections in Gujarat and Himachal Pradesh quite convincingly, the only thing that the BJP should now be concerned about is the disenchantment of the rural voters in PM Modi's home state. BJP's poor show in the Saurashtra region is a clear indication that all is not well with the rural people and farmers. The other key takeaways from the election results include the big vote against corruption, as the HP results show, and a universal endorsement of the government's flagship reforms like GST and the note ban.

There is a growing fear that the Modi government may go for populist measures when FM Arun Jaitley presents his Budget in February next year, his last full Budget ahead of the 2019 general election. If the government opts for this route to win a second term, that would put further pressure on the government's balance sheet, which is already under stress. A sudden reversal of the reform process is also bad news for markets and the economy at a time when the growth engines have started humming again.

So, what are the immediate priority areas for Modi in the remaining 16-odd months in office? Here are some of the views expressed by the panelists on the India Development Debate on Monday:

PANEL VIEW:
"We can keep on analysing the numbers and get into trivia of who supported and who didn't, what were the reasons, whether it was the caste combinations, etc. Eventually we are forming the government. The fact that the BJP has 19 states in this country of ours which is diverse and which has multiple issues says a lot," Shaina NC, spokesperson, BJP.

"We gained 63 assembly seats and they lost 66 seats compared to the 2014 Lok Sabha election. When we raise voices of different sections of the society, that is dubbed as casteism. The way we fought this election has brought in a lot of hope and like Churchill said, it is not the beginning, it is not the end, but it's the beginning of the end," Ajoy Kumar, National Spokesperson, AICC & Jharkhand PCC Chief.

"This election showed us a new template. You can lose seats, but still win. PM Modi is on a strong wicket for 2019 unless something dramatic happens on the economic front. Amid the difficulties of GST and demonetisation BJP sails through electorally. This is because reforms made life easy for many, and overall response was good," Swaminathan Aiyar, Consulting Editor, ET Now.

"The BJP remains the dominant political party after Gujarat results. Despite hardships from demonetisation and GST, which hurt the BJP, they have increased their vote share. What is worrying is we may see populism and identity politics taking centrestage rather than economic performance in the run-up to the 2019 general election. Hope populist measures are not disruptive," Sadanand Dhume, Resident Fellow, American Enterprise Institute.

"We should not extrapolate 2019 based on state elections. Rural voters went against BJP and urban voters opted for the BJP, because rural Gujarat felt the pain of demonetisation more than what urban voters suffered from GST. The good news is that the government will not undertake any structural reform that could lead to chaos in the next few months," Rashesh Shah, Chairman & CEO, Edelweiss Group.

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