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Rural Inflation

Inflation in rural areas fell marginally, to 8.35% in August 2014, from 8.37% in July 2014. Combined inflation for urban and rural areas eased to 7.80% in August, from 7.96% in July. Food inflation in rural areas reduced marginally to 9.55% in August from 9.56% in July. Inflation for vegetables in rural areas remained high at 18.95% in August compared with 19.52% in July. Inflation for milk products increased to 11.18% in August from 10.54% in July. Inflation related to fuel & power declined marginally to 5.02% in August from 5.18% in July. Inflation for clothing and miscellaneous items remained steady at around 9% and 6%, respectively. 

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3 Reasons why BJP is fighting an 'all-out war' in Maharashtra & Haryana

According to Nomura, assembly elections in Maharashtra and Haryana would help BJP to consolidate its position in Rajya Sabha and underline the Modi wave. In case there is hung assembly, there would be re-elections, increased uncertainty and this will raise doubts about BJP’s ability to carry forward legislative reforms

 

Maharashtra and Haryana will go to the polls for their respective state legislative assemblies on Wednesday, 15th October with the results likely to be announced on 19th October. "If the opinion polls are correct, then the Bharatiya Janata Party (BJP) will need a coalition partner to form the government, which is marginally better for reforms like more seats in the Rajya Sabha and more BJP-ruled states, but there is much uncertainty, especially surrounding Maharashtra, says Nomura in a research note.

 

Nomura said, according to opinion polls, BJP, the incumbent party at the Centre is likely to get a plurality in both the states, but will fall short of an outright majority (Figure 1). Indian National Congress (INC), the incumbent party in both the states, is projected to lose.

 


According to Nomura, there are three reasons about BJP making a strong effort to fight and win elections in Maharashtra and Haryana. The party even roped in services of its 'star' campaigner Prime Minister Narendra Modi to gain mileage from its performance from the Lok Sabha elections due to the ‘Modi Wave’. BJP got a single party majority during the general elections.

 

Importance of the state elections

  1. Consolidation of the BJP’s position in the Rajya Sabha (upper house): Any legislative reform needs to be passed by both the houses of parliament. While the BJP has an outright majority in the Lok Sabha (lower house), it does not in the Rajya Sabha (upper house), making it dependent on regional parties. Maharashtra and Haryana together account for 19 and 5 seats respectively in the Rajya Sabha, so a good performance by the BJP in these state elections will incrementally make legislative reforms less restrictive, although the BJP still will not have an outright majority in the Rajya Sabha (see below).

  1. Prime Minister’s (PM) political capital at stake: In the run up to these state elections, the BJP has broken ties with its erstwhile partners – Shiv Sena in Maharashtra and HJC in Haryana. PM Modi has been campaigning across these states and the BJP is hoping to cash in on the ‘Modi wave’ seen during the national elections. Hence, the PM’s political capital is at stake.

 

  1. Maharashtra is important for overall economic growth: It is the largest state in terms of share in national GDP (about 15% of total). Hence, economic performance in the state will have a national impact.

 

The best case in these state elections is for the BJP to get an outright majority, which will improve centre-state co-ordination and consolidate the BJP’s position in the Rajya Sabha, the research report said. "The worst case is a hung assembly, which would result in re-elections, increased uncertainty and raise doubts about the BJP’s ability to carry forward legislative reforms," it added.

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