India 2014

[jaichind]

For the NDA to beat UPA would require BJP to do very well.  So what is a reasonable best case scenario for BJP would be helpful to figure out since the rest of NDA at best will get around 23 seats.  

State               2009       2013   Diff
AP                       0             2      +2  (BJP sneaks off with a couple of Telegana seats)
Assam                 4             6      +2  (AGP does not eat into BJP vote share)
Bihar                 12            11      -1   (BJP by itself losing 1 seats is roughly best case)
Chattisgarh       10           10                
Goa                     1             2      +1
Gujarat              15           22     +7
Haryana              0             5      +5
HP                       3             3
JK                        0             1      +1
Jharkhand           8             5      -3    (-3 best case as INC-JMM would face BJP split from JD(U))
Karnataka         19            10     -9    (-9 is best case due to INC surge)
Kerala                 0              0            (BJP can get 8%-10% of the vote but no seats)
MP                     16            24     +8
Maharashtra       9            13     +4
Orissa                 0             5      +5  
Punjab                1             5      +4
Rajasthan           4           19    +15
TN                       0             1      +1  (alliance with DMDK can get a seat)          
UP                     10           25    +15 (Modi will help but loss of RLD as ally will have impact)
Uttarakhand       0             3      +3
WB                     1             2       +1
Delhi                   0             6      +6
Others                3             3      
Total               116          183

So BJP would match its best performance in 1998 and 1999 in the best case.  Unlike 1998 and 1999 BJP would be mostly without allies.  So best case is 183+23=206 for NDA.  To get to 272 NDA would need to rope in 3-4 large regional parties as a large regional party would get 15-25 seats.   That means 3-4 of TMC, BJD, BSP, AIADMK, TDP, and JD(U) will have to support BJP as parties like RJD, Left Front, SP will not will support NDA.  And that is in a situation where BJP comes up all trumps on all the states.  

[jaichind]

Thanks.  I think by the same logic we should look at a reasonable INC best case.  Note that because of greater alliance possiblities, the volitily and range of INC cases will be much wider than BJP.


State               2009       2013   Diff
AP                      33          17     -16  (YSRCP will cut into INC one way or another)
Assam                 7             8      +1  (decline of AGP will help INC)
Bihar                   2             6      +4   (alliance with JD(U) or RJD+LJP will yield seats)
Chattisgarh         1             3      +3  (reversion to mean implies INC should gain)              
Goa                     1             1      
Gujarat              11            8      -3  (somehow find a way to survive Modi wave)
Haryana              9             6     -3   (BJP and HJC alliance does not work well)
HP                       1             2     +1
JK                        2             2    
Jharkhand           1             5     +4   (JMM alliance pays dividends )
Karnataka           6           20    +14    (INC sweep over BJP and JD(S))
Kerala                13            9      -4    (somehow contain anti-incumbancy )
MP                     12           10      -2    (somehow contain Modi wave)
Maharashtra      17           15     -2    (somehow contain anti-incumbancy )
Orissa                 6             9      +3   (BJD anti-incumancy helps INC)  
Punjab                8             6      -2    (INC cannot count on Signh factor to help)
Rajasthan         20           12      -8    (somehow fight BJP to a draw despite Modi)
TN                       8             5      -3   (ally with DMK and somehow get respectable result)          
UP                    21           13       -8   (Rahul factor helps plus RLD alliance to limit loss)
Uttarakhand       5             3      -2   (fight BJP to a draw despite Modi)
WB                     6             5       -1   (somehow win some seats in strongholds)
Delhi                   7             3      -4   (contain Modi wave to fight for draw)
Northeast           6             6             (retain great result from 2009
Others                3             3      
Total               206          182

So best case INC is about the same as bast case BJP.  I think worst cast INC will be worse than worst case BJP.  In such a best case situation, which would mean return of DMK to UPA as well as adding JD(U) or RJD/LJP, UPA allies would get around 40 seats or so which would put UPA at 182+40=222.  Then UPA needs to rope in SP, YSRCP, and Left front to support it from the outside to form a government much like UPA-1 in 2004.

[jaichind]

CNN-IBN poll


UP
                  2009                          2013
            Votes     Seats        Votes     Seats  
SP         23          23              22     19 (17-21)
INC       18          21              16     13 (11-15)
BSP       28          20              21     16 (14-18)
BJP        18         10               27     31 (29-33)
Other    13           6               14       1  ( 0-2 )

BJP seems a bit high and SP a bit low given the 2012 assembly elections.  Also it seems that this poll does not take into account of the INC-RLD alliance.  RLD should be good for 5 seats and 2-3% of the vote.  Perhaps when it has INC having 16% of the vote and 13 seats they really mean INC+.  This is not clear as INC having 16% of the vote and INC+RLD having 16% of the vote is a big difference.

MP
                  2009                          2013
            Votes     Seats        Votes     Seats  
BJP        43          16              50     23 (21-25)
INC       40          12              32      4   ( 2-6 )
BSP        6             1                6      2  ( 0-4 )

This seems reasonable and most likely the upper bound of how the BJP will do.

Rajasthan
                  2009                          2013
            Votes     Seats        Votes     Seats  
INC        47          20              44     12 (10-14)
BJP        37            4              44     12  (10-14)
OTH       16            1              12      1  ( 0-2 )

Again.  This seems reasonable given the situation.  I suspect it will not work out this way.  More likely INC or BJP will win the 2013 assembly election in a close race.  The winner will then win a larger majority over the other party in the Lok Shabha.  BJP should have a slight edge.

[jaichind]

Summery of CNN-IBN polls so far in terms of INC vs BJP

http://exitopinionpollsindia.blogspot.com/2013/07/cnn-ibn-hindu-election-tracker-10.html



Poll is missing Orissa (INC will do a bit better than BJP), Jharkhand (INC will do better than BJP), Assam (INC will do better than BJP), Chattisgarh (BJP will do a lot better than INC), Kerala (INC vs Left Front with BJP getting zero), Punjab (INC and BJP doing about the same), Delhi (BJP ahead of INC), Uttarakhand (BJP INC neck-to-neck), HP (BJP ahead of INC), Haryana (INC slightly ahead of BJP), JK (INC slightly ahead of BJ), Various territories (INC slightly behind BJP), and Northeast (INC wins some seats, BJP nothing).   Most likely BJP will emerge by a small margin as largest party over INC as per this poll.  Although I find these poll results fishy.  INC is to overestimated in AP and BJP overestimated in UP.

[jaichind]

All India version if CNN-IBN poll out.  
            
              Vote share    Seats
NDA            29               176
UPA            29               152

Who should be PM
Modi                      19
Rahul Gandhi        12
Manmohan Singh    6
Sonia Gandhi          5
Mayawait                3
Advani                    2

If you add up people that wanted someone from INC vs BJP
INC                     23
BJP                      21            

Who should be PM (Modi vs Rahul Gandhi)
Modi                        33
Rahul Gandhi           31

Looking over the #s CNN-IBN gave out I was able to estimate the poll's results on a State basis.  I had to make an adjustment in UP to have INC 13 to be INC 10 RLD 3 or else the results makes no sense.


State                 INC             BJP              Others
AP                      13                0               YSRCP 13, TDP 8 TSR1 AIMIM 1
Bihar                  10                2               RJD/LJP 10 JD(U) 17  Ind 1
Gujarat                4              22
Karnataka          20               4                JS(S) 4
Maharastra        17               9                NCP 9 SS 11
MP                       4              23                BSP 2
Rajasthan          12              12               Ind 1
TN                        3               1                AIADMK 18, DMK 10 other regionals(PMK,MDMK,DMDK) 7
UP                      10              31               SP 19 BSP 16 RLD 3 Ind 1  
WB                       7               1                Left 9 TMC 25
Jharkhand           6                3                JMM 2,  others 3
Uttarakhand        1               4
Chattisgarh         1              10
JK                        1                0               NC 3, others 2
HP                       1                3
Haryana              5                4                HJC 1
Goa                     0                2
Kerela                 4                0                Left 14 KC 1 ML 1
Orissa                 4                3                BJD 14
Punjab                6                3                SAD 4
Assam                 5                5                AGP 2 Others 2
Delhi                   1                6
Federal               2                4                (6 small federal districts)
Northeast           5                0                Left 2 Others 4  (11 northeast states)              

With INC having 134 and BJP 160

Plugging these numbers into a best case post-election alliance building scenrio
We have NDA has 176 and could rope in as much as 290 seats.  UPA has 152 seats and could rope in as much as 279 seats.  A non-INC non-BJP alliance could rope in as many as 151 seats (remember a lot of parties cannot be in the same alliance at the same time, like SP vs BSP, TMC vs Left Front etc etc).  So such a Third Front government will have to be supported from the outside by UPA.


These polls results pretty much mirror the 1996 election results where we had
BJP 161 and proto-NDA 195 -> vote share 29.1%
INC 140 and proto-UPA 143  -> vote share 29.1%
United Front 192 (NF 79, Left Front 52, TMC 20, DMK 17 AGP 5 plus 19 seats of other small parties)  -> vote share 28.5%

So United Front formed the government in 1996 with INC support from the outside.
    

[jaichind]

Recent comments by various leaders on attitude toward joining NDA and/or Modi

“There is no chance of that happening (BJP-BJD alliance).
The Biju Janata Dal will not be a part of the (BJP-led)
National Democratic Alliance”   - BJD leader Naveen Patniak

“Will do all it can to stop Narendra Modi from becoming the
Prime Minister"   - BSP leader Mayawati

“No, never (Will you support BJP/ NDA if fallen short of
numbers). We will sit in the opposition”   - SP leader and CM of UP Akhilesh Yadav

“Trinamool will never support Modi”   - TMC leader Mamata Banerjee

“With Modi's rise, the BJP is left with parties like Shiv Sena
and Akali Dal who have a narrow sectarian approach. It is
going to affect BJP's efforts to widen support base in
building alliances and makes it impractical. Already NDA
has further divided and the JDU has gone out. It is not
realisable anymore” - CPM(M) and Left Front leader Prakash Karat

“Muslims were killed in huge numbers during 2002 Gujarat riots, comparing it to puppy getting crushed under car is shameful. It is disgraceful that man  (reference to Modi) holding CM post is having such kind of feelings,”   - TDP leader Chandra Babu Naidu

Of course AIADMK and DMK are silent on this issue as they want to keep their options open.

Note that SP, Left Front, BJD all spoke out against NDA but TMC, TDP, and BSP spoke more about stopping Modi.  You can see the contours of a deal wherer TMC, TDP, and BSP post-election supports NDA if Modi is dumped. 

[jaichind]

Times Now, C-Voter and India TV Survey

UPA     134 INC 119 NCP 6 RLD 3 JMM 3 IUML 2 NC 2 KC(M) 1
NDA     156 BJP 131 SS 15 SAD 6 RPI(A) 2 NPP (Manipur regional party) 1
SP         33
AIADMK 29

For PM
Modi                    37.7
Rahul Gandhi       17.6
M Singh                 6.2
Sonia Gandhi        3.9

Will get regional details as I find then.  

This means AIADMK will sweep TN, SP do very well in UP, BJP-SS-RPI(A) sweep Maharastra, and BJP-SAD have the upper hand in Punjub.  I wonder what happen to HJC which is a BJP ally.  I expect HJC, which is a member of NDA,  to get a seat or two even in a case where INC has the upper hand.  

[jaichind]

Details of Times Now C-Voter Survey


State                 INC             BJP              Others
AP                        7                0               YSRCP 14, TDP 9 TRS 11 AIMIM 1
Bihar                    1              14               RJD 12 LJP 1 JD(U) 11  Ind 1
Gujarat                5              21
Karnataka          17               8                JS(S) 3
Maharastra        11              11               NCP 6 SS 15 RPI(A) 2 MNS 3
MP                      12              16                BSP 1
Rajasthan            9              15               Ind 1
TN                        1                0                AIADMK 29, DMK 5 DMDK 2 VCK 1 MDMK 1
UP                        5              12               SP 33 BSP 27 RLD 3  
WB                       2               0                Left 17 TMC 22 SUCI 1
Jharkhand            4               3                JMM 3 JVM 3 Ind 1
Uttarakhand        3               2
Chattisgarh         7               4
JK                        1                1               NC 2 PDP 1 Ind 1
HP                       1                3
Haryana              6                2                INLD 2
Goa                     1                1
Kerela                 4                0                Left 14 KEC 1 ML 2
Orissa                 8                0                BJD 12 Left 1
Punjab                4                2                SAD 7
Assam                 8                2                AGP 2 AUDF 1 BPF 1
Delhi                   1                6
Federal               1                4                PMC 1 (6 small federal districts)
Northeast           3                1                Left 2 NPP 1 Others 4  (11 northeast states)              

UPA 136 INC 119
NDA 156 BJP 131

BJP is underestimated in UP and a bit in MP in my view.  On the other hand, Jharkhand results does not assume INC-JMM alliance so INC is understimated there.  Also this does not take into account of Telegana decision and does not take into account of alliances in TN which will be formed which will help INC.

[jaichind]

It is likely that INC will make a decision to go ahead on Telegana today.  The calculation is that infighting in INC and the split of YSRCP would doom INC in the entire AP anyway.  So why not salvage the 17 out of 42 seats in Telegana by claiming credit for it.  Note INC did not do this in 2009-2010 during the peak of TSR agitation for Telegana because then TRS will get credit for this.  INC is doing it now because things have died down and now INC will get credit for it.  Main issue is will how large Telegana would be and will Hyderbad be made a federal district and used as a shared capitial for both AP and Telegana.  If these decisions are made in the favor of TRS then there will be a INC-TRS alliance in Telegana and will most likely sweep the 17 seats there shutting out BJP.  In the rest of AP, TRSCP which has a low base in Telegana will come out loudly for a united AP and would capture a significant part of anti-Telegana vote in coastal AP. It will be really TDP vs YSRCP in rest of AP with INC running third.  I can even see INC voters in AP voting tactically for YSRCP to defeat TDP in coastal AP in this case.   

It is interesting.  Given the Telegana issue the INC of 2009 could not have been able to solve it without losing significant votes either in Telegana or Coastal AP or both.  What INC had to do is to clone itself into a pro-Telegana INC and an anti-Telegana INC and capture both vote blocs.  Either by design or accident, it has done this with INC playing the role of pro-Telegana INC and YSRCP the anti-Telegana INC.  All that needs to happen is for these two parties to merge after the election and the scam on these emotional votes on both sides complete.

Of course INC could still bungle it so neither side is happy and it loses everywhere.  But if it does nothing INC would close to losing everywhere anyway, or close enough to it.  It is making a medium risk but high reward strategy by going with Telegana now.

[jaichind]

Note that all these polls assume that in TN it will be AIADMK, DMK, INC, DMDK, and PMK all running seperately.  In which case AIADMK clearly has the largest base and will sweep the state.  But usually TN comes donw to a bipolar contest between two alliances.  In 2011 assembly it was AIADMK-DMDK-Left vs DMK-INC-PMK-VCK with MDMK boycotting the polls.  AIADMK alliance won based on DMDK adding a critical 8% of the vote of the AIADMK alliance. This time AIADMK already destroyed its relationship DMDK and for sure destroyed any relationship with PMK (mostly by arresting PMK's leader.)  INC and DMK alliance fell apart so a AIADMK that has Left Front and most likely MDMK will surge to victory.  But things are never that simple.  Scary numbers like AIADMK winning 29 seats will almost force a possible DMK-DMDK-INC-PMK-VCK alliance.  In such a case AIADMK-Left-MDMK will most still have the advantage but it will not be a sweep. 

Also there is an issue of will AIADMK ally with BJP.  This is unlikely from a game theory point of view.  If BJP joins AIADMK front then Left front will be out and could very well join DMK alliance.  Whereas if, as it is likely, INC joins hands with DMK, there is no chance that BJP will be part of DMK alliance.  So AIADMK will still link up with Left Front this coming election along with MDMK.  How well DMK does is really a function of how "grand" the anti-AIADMK alliance ends up being.

[jaichind]

UPA comes out in favor of Telegana.  AP to be split into Telegana and Seemandhra. Telangana will be carved out as India's 29th state; the industrial hub of Hyderabad will be a common capital for the next 10 years



More info

[jaichind]

It is 1996 alla over again. What are the alternatives to UPA and NDA. What does the third front look like? One thing is however not the same as in 1996, the left fron is much weaker and then regional parties are much stronger.

If BSP and SP formed and alliance (I know that this is not likley) they could sweep UP. AIADAMK sweeps TN. In West Bengal and AP INC and BJP could be really weak and even weaker if there were some Left frpn cooperation.

Third front government from my point of view would be

Max(Left,TMC)+Max(SP,BSP)+Max(RJD+LJP,JD(U))+MAX(YSRCP,TDP)+TRS+BJD+Max(AIADMK,DMK)+DMDK+PMK+MDMK+VCK+MDMK+JD(S)+AGP+INLD+PDP+JVM+independents.  UPA will then support it from the outside just like in 1996.

Chances of BSP and SP forming an alliance is near zero.  Back in 1993 there was a SP BSP alliance but that fell apart quickly.  The social bases of BSP and SP are in conflict in UP.  BSP are the party of dalits and SP are the party of OBC.  Best way to think about it in US terms is imagine a political system in the Old Jim Crow South where the BSP represents the Blacks and SP represents "White Trash."  INC and BJP are the party of privileged Whites which are not in economic conflict with either group but these two groups are in social and economic conflict especially "White Trash" need to "put Blacks in their place" so they are feel they are not the bottom.

The best metric for the possibility of a non-UPA non-NDA government is if SP gets a lot more or a lot less seats versus BSP and if TMC gets a lot more or at less than Left Front.  If they get the same amount of seats they would lack the legitimacy to ask for the throne.  If one pair gets a lot more than the other then they can begin to claim a mandate in light of failures of UPA and NDA.

[jaichind]

Interesting. Any consecvences for political alliances in AP and Telanga?

With the Telegana decision.  In non-Telegana AP it will be a three way INC, TDP, YSRCP fight which INC will be third and TDP and YSRCP will most likely split honors.   TDP is stuck.  It has a loose alliance with TRS.  But but if it comes out for Telegana it will be defeated by YSRCP in rest of AP.  But if it does not and INC-TRS will either merge or form an alliance as per TRS promise, then INC-TRS will sweep Telegana.  Before the INC decision, BJP-TRS alliance or TDP-TRS alliance could have sweep Telegana but at this stage TRS will most likely have to go with INC as INC has positioned itself in Telegana as the party that got Telegana done.  Like I said before, TDP's main problem is that it cannot be both for and against Telegana at the same time.  INC found a way to be both for and against Telegana by having two INCs (INC and YSRCP). 

[jaichind]

Crime pays.  In India about 15% of candidates for MPs or MLAs have criminal records.  But 29% of all MPs and MLAs have criminal records, 14% serious crimes (like murder, rape etc etc.)  So this means a candidate with a criminal record is twice as likely to win as a candidate without a criminal record.   I like how SS (Shiv Sena) has 75% of its MPs and MLAs have criminal records.  Parties which represent OBCs like JD(U), RJD, and SP tends to have higher rates of MPs and MLAs with criminal records.

[jaichind]

Dumb question, what are the benefits of a separate Telugu state?

There are legitmate and illegitimte reasons to want Telegana. 

On the somewhat legit side, Telegana reagion is inland and has been a backward part of AP where the coastal part of AP has been much richer.  Hyderbad which is capital of AP is part of Telegana has been the only wealthy part of Telenaga. Over the years a lot of people from coastal AP have migrated to Hyderbad and the AP government which then collect resources from all over the state will tend to spend those resources on Hyderbad and coastal AP mostly because that is where the economic opportunities are and coastal AP outvote Telegana.  So Telegana activitist view Hyderbad wealth as something that should be spent on Telegana and not all of AP if Telegana was its own state.   

On illegitmate side, politicans will tend to create a problem they can solve and then solve it to get credit for it.  So local Telegana politicans who cannot solve the problem of Telegana backwardness would blame the fact that Telenaga is not its own state for their own poor administrative abilities.  History of places like Jharkhand where it was claimed that its mineral wealth was sent upstate to rest of Bihar did not really boom after it formed its own state 10+ years ago.  So I am not sure creating Telegana really fixes the issue.  On the ovter hand, enough people believe that this is a solution to their problem to make it a political hot potato.  As I pointed out, back in 2009-10 over 600 people committed suicide to pressure the government to create Telegana.

[jaichind]

Outlook magazine did a poll in Telangana

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As expected, there are stories coming out of non-Telangana AP of riots and of course suicides to protest the decision to create Telangana, just like the protest to create Telengana back in 2009-10.

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Latest updates.  
1) INC is in such a powerful position in Karnataka that there are situations where BJP is not running candidates but passively supporting JD(S) or KJP in various by-elections to stop INC.  Not so great for BJP as it weakens their grassroots and INC is running against JD(S) as a crypto-Modi supporter.  
2) In Bihar JD(U) leader implies that it could join INC if the UPA government gives Bihar status to get more funding due to its backwardness.  
3) In Telangana TRS faces a split where some members sensing INC might get credit for Telangana might bolt the party to join INC and ride the INC wave in 2014.  In the rest of AP, TDP is caught being for and against Telangana as it tries to stay competitive in Telangana yet still try not to be crushed by YSRCP as YSRCP loudly proclaim itself as the anti-Telangana party in the rest of AP.

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Latest India Today C-Voter Survey





UPA and NDA both far from majority.  If this were to take place we will have a Third Front government.

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Couple questions: Is a third-front government possible, or would that be too loose of a coalition (even for India) to work out? And are the Communist parties bouncing back? Last I heard they had been defeated in a landslide in the state elections in some of their strongholds like West Bengal.

I would imagine a third front government would be

(Left Front or TMC) + (SP or BSP) + (JD(U) or RJD) + (TDP or YSRCP) + (AIADMK or DMK) + LJP + TRS + BJD + MDMK + PMK + VCK + JD(S) + AGP + INLD + PDP + JVM + independents.  If the results are what the poll says this front will have around 140-150 seats.  Then UPA will support this front from the outside.

Left front's chances are mixed.  Really a function of how TMC does.   TMC is using old Left Front tactics in rural WB.   This could lead to a realignment in rural WB toward TMC or it could backfire on TMC. 

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The situation with the Indian Rupee is not going well.  The real solution are economic reforms but with UPA in trouble in opinion polls it is unlikely that would take place.  The government seems to want to use capital controls to contain this but that will work on the short run but will bad for the economy on the long run.  I suspect this will not be resolved until after the elections.  Of course it is likely the elections will produce a weak government. 

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C-Voter India Today also came out with polls on Assembly elections for Madhya Pradesh, Chattisgarh, Delhi, and Rajasthan which are due to take place later in 2013.



AAP is the anti-corruption Aam Aadmi Party which came from the anti-corruption Anna movement back in 2011.  It has some strength in Delhi but no where else.  It is anti-INC and if anything will align with NDA.  It was thought that AAP would split the anti-INC vote but according to this poll it would still be enough to oust INC from power.  Of course INC CM Diksh**t is still popular so INC could come back.

INC is doing better in Chattisgarh than expected where INC is in disarray and the government is popular but it seems that INC and BJP are neck to neck.   Of course the rebellion of INC leader Ajit Jogi will perhaps spoil this unexpected INC comeback.  




If this is accurate then MP is stronger for INC than most would thought despite the popular BJP government there.
 
INC somewhat behind BJP in Rajasthan mostly due to the star power of Raje who was former CM and scion of the Scindia clan.  Of course another branch of the Scindia clan, Jyotiraditya Madhavrao Scindia, is in the INC, and the leader of the INC in MP.  Jyotiraditya Madhavrao Scindia is the nephew of Raje.  The Scindia clan is historically for BJP but   Jyotiraditya Madhavrao Scindia's father broke ranks and when over to INC.

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Who would be PM for the Third Front?

SP leader Mulayam Singh Yadav, or BSP leader Mayawati, or TMC leader Mamata Banerjee.  Perhaps JD(U) leader Nitish Kumar or Sharad Yadav since Kumar does not seem to have national aspirations.  The first three are also quite polarizing.  So perhaps a Sharad Yadav who is not as polarizing might be a good compromise candidate if JD(U) ends up in the ruling alliance.

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Paul Krugman does not seem to get why there is a panic in the fall of the Rupee.

http://krugman.blogs.nytimes.com/2013/08/20/rupee-panic/

His point is that most of India's debt is not dollar denominated so "the depreciation of the rupee will presumably lead to a spike in inflation — but it should be temporary."   Of course he could have argued, correctly, that India has a large foreign exchange reserve to defend the Rupee if need so to prevent a free fall. 

What Krugman does not get is that inflation is already very high in India and this is a political problem as well.  The situation is the following.  India imports a significant chunk of its energy needs.  But as part of the political election process, there are massive subsidies from the government to domestic end user of energy.  Typically, state governments promise free power to farms to get their vote and then mostly carries it out until it gets to expensive.  This situation leads to excessive and inefficient use of energy in India.  It is clear the UPA government will not do well in the next election so the the markets expect UPA to roll out more subsidies (like the most recent Food Bill). It is also clear that NDA with Modi at the helm will find it hard to win a majority next election so the results will be a weak UPA government, a weak NDA government, or a weak Third Front government.  All three alternatives means increasing government subsidies for the next few years.  Now with QE being rolled back the Indian Rupee falling, this is triggering a vicious cycle where the Rupee falls, the cost of government subsidies rise since the government has to pay in $ for energy but keep the cost the same for energy in terms of Rupees domestically.  The markets see that the only way out is to monetize the debt so people rush to move assets out of Rupees overseas or into Gold.  Either way the Rupees falls further starting the cycle again.  With its large foreign exchange reserves the Central Bank of India and stem this slide for a while but on the long run the solution is to get rid of these subsidies which seems unlikely given the way election 2014 is shaping up.  Of course Krugman will not understand this since he seems to like all kinds of subsidies, welfare and freebies as part of government policy. 

[jaichind]

Is the Mamata, Nitish, Naveen "Eastern bloc" talked about earlier this year gone anywhere? I know TMC had talked up the possibility since they ditched the UPA.

Not that I know of.  I am pretty sure JD(U) will hold back for a while and see which direction the political winds are blowing.  Their angle is mostly to try to get UPA government to assign "special status" for Bihar which means more subsidies and then join UPA and go to the elections telling Bihar how they brought home the bacon.