NDA’s Bihar Boost, Hopes Still Up On US Trade Deal: The Week That Was
India’s political stability contrasts global turbulence, as US scandals, China tensions, and shifting trade dynamics shape markets and regional geopolitics.
The Gist
- Nitish Kumar has been sworn in as Bihar's chief minister for the 10th time, marking a significant electoral win for the NDA.
- The NDA's success in nearly all state assembly elections since the 2024 Lok Sabha elections raises questions about the ruling coalition's stability.
- Historical context shows that a majority does not guarantee political stability, as seen during the Rajiv Gandhi era amidst turmoil.
Bihar has presented the National Democratic Alliance (NDA) in charge at the Centre a sterling electoral victory. Nitish Kumar has been sworn in as chief minister for the 10th time.
The fact that the NDA has won all, save two, state assembly elections held since the 2024 Lok Sabha elections serves, in the eyes of many, to shake off doubts about the stability of the ruling coalition created by the BJP’s failure to secure a simple majority, leave alone the two-thirds majority it had been seeking.
Majority Isn’t Stability
Political stability is not about the stability of the regime in place. The Rajiv Gandhi government (1984-89) had a brute majority in the Lok Sabha, so embodied regime stability. But India was in political turmoil.
Secessionist terror was afoot in Punjab and Kashmir, Assam had only recently stablised after a prolonged anti-foreigner agitation that took a communal turn, Tamil Tigers were killing leaders of other Sri Lankan Tamil organisations all over Tamil Nadu, and communal riots and tension spread across North India over a campaign to demolish the Babri mosque in Ayodhya.
The Narasimha Rao government that carried out India’s reforms and opening up was a minority government during its initial, most active years. Yet it presided over elections in Kashmir and Punjab, and, after the demolition of the Babri mosque and the violence that followed in its immediate aftermath, heralded a period of zero communal violence till the end of the decade.
With or without an absolute majority for the BJP in the Lok Sabha, there is no threat of political instability in India, with or without political success in state elections. The terror strike in Delhi is a troubling incident, but as yet there is no reason to see it as the beginning of a trend of disruption from within.
Trump-Epstein Blowback
Jitters over a possible AI bubble subsided after NVIDIA reported bumper results for Q3 and projected a repeat in Q4. The US dollar strengthened, as expectations of a possible rate cut by the US Fed in December were scotched by the minutes of the last Federal Open Markets Committee meeting, as most members had been in favour of caution over rate changes, given the potential for inflation, even if job prosects were turning dim, even after the end of the longest government shutdown in US history.
US President Donald Trump was embarrassed by the release of an email from the Epstein files, in which the deceased sex offender claims Trump was the dog that did not bark, that he knew all about the girls and had spent considerable time with one of them in his, Epstein’s, house.
Trump slashed tariffs on bananas, coffee and cocoa from a variety of Latin American countries, tried to stop the release of yet more Epstein papers by asking Republican House members to vote against such a move, and when that failed, urged the release of all papers, turning a champion of transparency. In the process, however, he lost the trust of Representative Marjorie Taylor Greene, originally a keen Trump supporter who has now turned a critic after Trump berated her as a traitor for supporting the release of all Epstein files.
Hispanics, worried about being picked up by roaming Immigration and Customs Enforcement officials, are staying put at home. This has made a notable dent in the sales of goods that are typically picked up from shop shelves rather than ordered online, such as beer and soft drinks. Starbucks baristas have gone on strike, demanding better pay, adding to the general sense of unease created by layoffs at the tech giants and pronouncements by Elon Musk and his ilk that AI would eat up entry-level jobs.
Trump’s Tariff Tale
Indian officials continue to be upbeat about signing a trade deal with the US. The only worry is that Trump keeps repeating his claim that his intervention stopped a nuclear war between India and Pakistan in May.
In his latest iteration of what can only be considered a plea for nomination for the Nobel Peace Prize, Trump claimed he had threatened import tariffs of 350% if India and Pakistan did not stop fighting. While on his Asia tour, he had claimed to have threatened penal tariffs of 250% on the South Asian contenders.
The Chinese economy continues to struggle to make its internal circulation carry a larger share of the burden of economic growth, relieving external circulation. Exports to the US are down, as expected. However, the economy grew 4.8% in Q3, and is expected to turn in a growth rate of 5% for the year as a whole. China will add $970 billion to global output. India will not contribute a third of that, even if it were to grow at 7%.
A wholly avoidable comment by Japan’s new prime minister, Takaichi Sanae, has created new tension between China and Japan. China has suspended seafood imports from Japan. Chinese social media is up in arms against Japan. Rare-earth exports could be barred next. Takaichi had told parliament that Japan could invoke its right to collective security, that is, call for US involvement, in case of a Chinese attack on Taiwan. Beijing has taken umbrage at such hostile intentions.
The tension in the neighbourhood matters to South Korea, obviously. But life has to go on, regardless, or stand still. South Korea grounded all planes for half an hour on November 9, so as not to disturb students taking their English listening comprehension segment of the country’s gruelling university entrance examinations. Half a million students took the test this year.
Adani Bets On Battery Storage
India’s car exports to Europe have been growing fast, reports Nikkei, even if from a low base. Maruti Suzuki is in the lead, as it has been for car exports to Japan. Honda is joining in. Ford is returning to India only to produce cars for export.
Jio is offering free access to Google’s new, enhanced AI platform Gemini Pro to all subscribers who are on unlimited data plans. This follows on the heels of Airtel giving all its subscribers free access to Perplexity, a popular AI tool. Clearly, the world’s tech giants want India’s young people trained to use AI tools, both to create AI-savvy manpower and to make their own platforms popular in one of the world’s largest young populations.
Adani has started a battery energy storage systems business, with an initial 1,126 MW storage capacity that can supply power for three hours. This takes care of the immediate problem of having to store intermittent renewable power, but produces long-term supply chain dependence for India’s power infrastructure on China. This is a vulnerability created by India’s failure to create and implement a coherent plan for the storage of solar and wind power.
