As I sit down to write this, the BJP has unveiled Narendra Modi as its choice for Prime Ministerial candidate and the Delhi Four in the gang-rape case have been sentenced to death. Neither of the decisions will fructify for a while but it is a gamble as to which will reach its final destination first. The court case has a determined trajectory via the High Court and then the Supreme Court, and then if the judgment is confirmed, to the President for a mercy petition, and assuming he will reject it, the final hanging. Even so, who can tell when that will be?
The fate of Narendra Modi is a bit more uncertain yet. The conventional wisdom in India Inc is that his choice as BJP’s lead candidate will ensure his elevation as the Prime Minister and good things will follow. The market is rational, of course. But the market is always rational even as it changes its mind from day to day. Lehman Brothers was a going company on September 12 by rational market expectations and bankrupt by September 15, 2008.
So, what are the uncertainties facing India in the next eight months before the elections have to be held. Let me rule out the chances of an early election for the moment and, conditional on that, guess what will happen. Most opinion polls converged last month on the prediction that Congress/UPA will lose around 100 seats and come in at 100-120. Make that a wider range of 90-120. They are also quite gloomy about BJP/NDA and put it at no more than140-160. Make that 140-170. This leaves, as of now, the country with the terrifying spectacle of a third-party coalition.
But things have moved on since last month. The rupee’s collapse despite its slight recovery is a major embarrassment for the UPA and cannot be gainsaid by the usual excuses. Despite Raghuram Rajan’s valiant efforts, it is doubtful if that situation will improve any time soon. Indian exports are price-elastic and there has been some upsurge in exports, but the inflation continues and the RER will require further depreciation if