Modi still popular despite slower growth

NEW DELHI • When Prime Minister Narendra Modi voided almost all of India's cash last year, Mr Kuldeep Mishra's savings were turned into worthless paper.

The vegetable wholesaler was forced to spend hours in bank queues and his business suffered for a month. Still, he voted for Mr Modi in state elections soon after and plans to do so again in a national poll due in 2019.

"Wealthy people had black money and it all came out," Mr Mishra said in a market in Sahibabad in Uttar Pradesh, one of India's poorest states, using the local term for cash stashed away to avoid taxes.

"We have never had a better prime minister than Modi."

Mr Mishra, 49, says sales rebounded in a month, though official data shows India's expansion slowed to a three-year low between April and June, more than six months since the shock cash ban. Growth has also been affected by the disruptive roll-out of a new sales tax. Yet, voters like Mr Mishra are expected to vault Mr Modi to power in his home state of Gujarat next month.

There is no single reason for Mr Modi's enduring popularity. While critics point to the Hindu nationalist agenda of his Bharatiya Janata Party as key to its electoral success, others say demonetisation fortified his reputation as an authoritative leader, and undermined the opposition's attempt to paint him as part of a "suit-boot" government that favours the business elite over the poor.

"While many accept that the move has dampened consumption, they believe it has dampened conspicuous consumption that was fuelled by black money and tax evasion," said Ms Reshmi Khurana, South Asia head for risk management firm Kroll.

"It did boost his image in the sense that he's being seen as decisive and willing to take bold action, even if it ruffles the feathers of entrenched stakeholders."

Gujarat will be a key test, where voters will be called on to weigh Mr Modi's personal popularity against his policies, which have disrupted India's vast informal economy that mainly deals in cash and creates the largest number of jobs.

While India lacks adequate employment data, surveys suggest that Mr Modi is far from creating the 10 million jobs a year needed to keep up with his young and rapidly expanding workforce.

The election in Gujarat will follow the Dec 9 vote in the state of Himachal Pradesh, which Mr Modi is expected to wrest from the opposition Congress party.

The positive opinion polls are partly flattered by the fact that the Congress party and its leader Rahul Gandhi have failed to offer a compelling alternative.

"It's not that all of Modi's policies are good," said retired factory worker Mahendra Singh, 76. "But we'll give him another chance in 2019."

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A version of this article appeared in the print edition of The Straits Times on November 09, 2017, with the headline 'Modi still popular despite slower growth'. Print Edition | Subscribe