Assembly polls to test govt, speed of reforms

Assembly polls to test govt, speed of reforms

Mumbai: The government faces an electoral test in three state polls on Tuesday that could help dictate how fast the ruling Congress party pushes ahead with reforms and measures to revive economic growth.

The polls in Maharashtra, Haryana and Arunachal Pradesh will be the first popularity test of the left-of-centre government since its landslide win in a May general election.

The vote comes as the government has grappled with an economic slowdown, rising food prices and the worst dry spell in four decades, trends that have slowed the pace of reforms and pushed up government spending on food imports and drought relief.

A good performance by Congress could help convince Prime Minister Manmohan Singh the government can tackle key reforms such as disinvestment and a new tax code, without an electoral cost.

“Victory in the states will bolster their confidence to push forward more aggressively with the initial set of policy measures that they’ve already embarked on," said Sanjay Kumar, a fellow at the Centre for the Study of Developing Societies.

“A big win will give them greater confidence to do more."

A mixed performance can lead to delays in execution and prompt more populist spending, such as a rural employment guarantee scheme, analysts said, just as investors worry about a rising fiscal deficit.

Some Congress party insiders say that with the opposition Bharatiya Janata Party weak and divided, the main pressure for social spending is coming from politicians within the government, who could gain influence with a poor ruling party showing.

Counting of the electronic vote is on 22 October.

State elections tend to be about local issues such as China’s claim over Arunachal Pradesh and an anti-migrant sentiment in Maharashtra.

However, the Congress has highlighted its record of several years of rapid economic growth before the recent slowdown, and measures such as a loan waiver for farmers and the jobs scheme that helped win the national vote.

Analysts say the Congress is expected to retain most of Haryana’s 90 seats and Arunachal Pradesh’s 60.

The race for the 288 seats in Maharashtra, where the Congress and its Nationalist Congress Party ally are battling the combination of the main opposition BJP and the hardline Hindu party Shiv Sena, is expected to be tougher.

The breakaway faction of Shiv Sena, the Maharashtra Navnirman Sena, could play spoiler and split the vote, perhaps leading to a hung assembly in the prosperous state and delaying projects such as plans to upgrade the infrastructure of financial hub Mumbai.

“If the Congress has to get support from the Third Front and independents, administration will be chaotic and the focus will be on staying in power rather than any meaningful policy execution," said Kumar Ketkar, editor of the Loksatta newspaper.

“It will be a distraction at the centre and prompt some populist measures and perhaps more spending."