An ‘action-packed’ 2017 foretold by events of New Year’s eve

This new year-eve was unusual. A day that usually goes with revelry and celebrations was instead overtaken by politics. Across the country, people anxiously waited to hear what Prime Minister Narendra Modi had to say in his special address to the nation. In Uttar Pradesh, the feud in the ruling Yadav family imploded, only to make Akhilesh Yadav -- the 42-year-old chief minister of the country’s most populous state -- emerge with a stronger grip over Samajwadi Party. Down south, Sasikala Natarajan opened a new chapter in Tamil Nadu’s politics, taking charge of the ruling AIADMK. Elsewhere, a festering political crisis in Arunachal Pradesh saw 33 MLAs cross over to the BJP to form its government in the northeastern border state. In the Capital, Delhi’s new lieutenant governor Anil Baijal took charge, amid hope that the city-state will finally see an end to the two-year-old bitter turf war between its elected head and its top administrator.

In a way, the events of the day foretold what 2017 will be – ACTION-PACKED.

The economy will be in focus as the uglier side of demonetisation begins to play out, through shrinking growth and job losses. A populist, fiscal stimulus-driven budget is expected, but the government’s ability to steer the economy and push broader reforms will be constrained by political opposition. A not-so-benign global economic environment will make things more complicated. Oil prices are firming up; capital flows remain volatile. All of these have kept the Reserve Bank of India from lowering interest rates and warn that inflation could creep up again. If prices were to rise at a faster rate, then it would be a double whammy for people, especially in the lower-income groups, who are already battling the downside of demonetisation. These shorter-term concerns will not be addressed by the big push to digitise economic transactions, which will no doubt help modernise the economy, improve efficiency and clean up the system but only in the longer term.

Read: Akhilesh, Ram Gopal taken back into Samajwadi Party a day after Mulayam expelled them

Prime Minister Narendra Modi and his government will increasingly be judged by their actions and the outcomes thereof, and not by the intent expressed. That is when politics will come into play. The groundswell of support for Akhilesh Yadav from the rank and file of the Samajwadi Party was surprising. It suggests the ground reality in Uttar Pradesh, which goes to polls in February-March, might be different from what most political analysts have been predicting. That the ruling party, more so an Akhilesh-led SP, could still be in the race; that BJP may not pull off a majority on its own despite the hype; that UP is anything but an open and shut case. The next few days will be crucial. For now, SP patriarch Mulayam Singh Yadav has gone back on his decision to expel Akhilesh. But it is not clear what the warring sides have agreed to and what will happen when the party holds its general convention. If Akhilesh were to come out a winner, the elections in Uttar Pradesh will trigger a broader realignment of political forces. Regional parties, especially in the north and the east, will increasingly close ranks. The much-marginalised Congress, which will see Rahul Gandhi finally take over as president, will be looking to revisit coalition politics.

Read: Rahul, Chidambaram target Modi over cash withdrawal limit after 50-day deadline

It remains to be seen how the BJP will respond. A more aggressive BJP could mean governance at the Centre will suffer, as it did through the just washed-out winter session of Parliament. Key economic reforms such as the implementation of a unified goods and services tax (GST) system will either get delayed or shelved. An accommodating BJP, on the other hand, could help Parliament do business. It could also mean 2017 will see less of the controversies, including the Arunachal Pradesh-like developments, which often undermined the nation’s social and democratic fabric.

In the new year, let’s hope the ruling party chooses the path of consultation over confrontation.

Read: Demonetisation will have adverse effects, says economist Amartya Sen