Moody’s Upgrade, Pew Survey Results And Ease Of Doing Business: Why Modi’s Hat-trick Is Bad News For Rahul Gandhi

Coming at the heels of moving up 30 places in the World Bank’s “Ease of Doing Business” index, and yesterday’s Pew Survey’s results of the highly positive sentiment about the Modi government in all parts of the country, Moody’s Investors Service, has upgraded India’s sovereign rating from Baa3 to Baa2 reinforcing Prime Minister Modi’s reformist credentials. This marks a hat-trick of good news for the government which had very recently under been fire for GST debacles coinciding with the Demonetisation anniversary.

Notably, all these combined spell bad news for Rahul Gandhi who seems to be focussing all his energy on the campaign trail in PM Modi’s home state, Gujarat where elections are scheduled in December.

The Bharatiya Janata Party (BJP) is seeking a consecutive sixth term in Gujarat while the Congress has made it into a prestige battle for Rahul Gandhi who’s elevation to Congress party chief is touted to happen 'soon’.

But why exactly is all this bad news for Mr Gandhi?

First, the Modi government seems to have turned a corner when it comes to GST and DeMo-related bad news. While demonetisation did yield significant political yields, especially in Uttar Pradesh elections, the government continued to be criticised for the manner in which the whole exercise was carried out. In addition to fielding attacks on demonetisation, the government had to wade through a lot of muck during the roll out of goods and services tax (GST). This, combined with the slow down indicated by GDP numbers, had nearly put the government on back foot.

But this is all in the past now. With Moody crediting demonetisation as a ‘reform’ measure and GST-related issues slowly settling down, the going will only get easier for Modi. The government has already cleared major investment plans in roads (Bharat Mala), is pursing public sector bank recapitalisation and significant disinvestments, such as that of Air India. The monsoons too have been by and large good across the country. Given all this the economy is sure to see a quick rebound in the coming quarters and Rahul Gandhi may run out ammunition to attack the government.

Second, Rahul Gandhi will be going into the Gujarat elections trying to attack the Prime Minister for his economic record. But he will find himself trying to contradict the media narrative in the next few weeks. Modi’s hat-trick provides him with a lot of tailwind in terms of shaping the narrative and Rahul’s rhetoric on economics must stand out against all this. Going by his previous utterances on GST, we can be reasonably sure that he is more likely to fumble rather than shine.

Further, Rahul Gandhi has been taking up demonitisation and GST implementation time and again at his election rallies, owing to a large trader class in Gujarat, but his rhetoric might as well be falling on deaf ears as indicated by the Pew Survey. West India, including Gujarat and Maharastra, gave PM Modi a 92 per cent favourable rating as opposed to only 58 per cent favourable rating for Rahul across the country. So much for targeting.

From what it looks like, just when Rahul Gandhi was beginning to get aggressive he might have been forced to the back-foot.