The first major event is the annual budget, which effectively made income tax nil for the vast majority of the population, ie those earning below 8 lakhs. The consumption economy will be fuelled by these developments, which augurs well for many FMCG stocks and mutual funds that invest in them (multi-cap, mid-cap etc).
The second event is the terrorist attacks in Kashmir which elicited a major emotional response from the rest of India. The general reaction is similar to the 2011 Anna Hazare movement when common citizens were fed up and marched on to the streets. Now there are candlelight marches in many residential communities.
2. Tax Reform: There has been big talk of currency-tax reform and we did see two big moves. One was demonetization which could have been executed better and second is the GST rollout. These provide a strong framework for the future growth of the economy and were like ‘bitter medicine’. Modi goes into the election with the memory of these painful reforms being distant. As they say, public memory is short.
3. National Security: Retaliation on Pulwama bombing in Kashmir will increase the appeal of Modi as a strong leader. As it is, terrorism-related incidents outside of Kashmir, Punjab, and NE have been extremely low over the last 5 years.
4. Reservation for Economically Weaker Sections: Modi has been able to pass a constitutional amendment granting a 10% reservation for EWS. This is politically very significant in states like Uttar Pradesh and Madhya Pradesh.
5. Opposition Dynamics: The movements in the opposition camp seem to indicate that they are bracing themselves for a post-Modi-2 era. Congress seeking to rejoin the opposition alliance in UP indicates that following #4 above, a caste-based strategy is not working. Even Mulayam Singh Yadav has endorsed Modi.
6. Friendly Fire in Politics: Modi has been able to retain key allies in Punjab (SAD), Maharashtra (Shiv Sena), Bihar (JD-U. He has also stitch an alliance in Tamilnadu. Allies like Ramvilas Paswan known for their uncanny ability to predict which way the wind is blowing are sticking with Modi. Regional parties dominant in their states, that are strongly opposed to Congress (eg: Telangana, Odisha) are also likely to support Modi in case of a deficit in Loksabha.
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