The US & Asia: Beyond the first 100 days, what difference can Biden make? ; India state elections: BJP’s political juggernaut stopped in its tracks

Highlights from the CAA Weekly Table:

  • Asian economies: We estimate that the tragic surge in COVID infections in India should peak sometime in the third quarter. In the meantime, growth will slow, inflation rise, and key policy initiatives will be delayed. Elsewhere the news is decidedly better, with South Korea and Taiwan firing on all cylinders, Thailand seeing tentative signs of improvement, Indonesian enjoying higher foreign investment inflows and Singapore continuing to do well.
  • Asian political risks: In Indonesia, the latest cabinet reshuffle demonstrated the increased clout that President Joko Widodo (Jokowi) wields. He is better-placed to appoint competent technocrats rather than political hacks and is less afraid of standing up for religious moderation.

The US & Asia: Beyond the first 100 days, what difference can Biden make?

Looking beyond the commentaries on Biden’s first 100 days, we believe two themes will drive Biden’s longer term impact on Asia.

  • First, the ideological changes his economic policies represent will influence policy making in Asia as well, encouraging a larger role for the state. Biden’s ambitious economic programmes will also help strengthen demand for Asian exports for several years. However, Biden’s trade policies may carry less favourable implications for Asia.
  • Second, the geo-political consequences may be more mixed. America’s re-engagement with allies in Asia and tough posture towards China will give the smaller Asian nations more room to manoeuvre against an assertive China. But China is undeterred for now, and may well step up its pressure on Taiwan and other countries with whom it has territorial disputes.

India state elections: BJP’s political juggernaut stopped in its tracks

Assembly elections were held in five states outside the Hindi heartland where the ruling BJP has its base. The result was a clear rebuff to Premier Modi’s ruling BJP party. 4 key takeaways:

  • First, the limits of the Hindu nationalism that the BJP espouses are being reached. While the BJP’s vote share in West Bengal soared, it still fell far short of winning the state as it had expected – despite a massive personal effort by Modi and his senior colleagues. It barely made gains in south India though it held onto its strong position in Assam.
  • Second, the BJP’s opponents are finding ways to blunt the BJP’s use of Hindu nationalism, showing they can maintain their appeal to Hindus while not forsaking the Muslim vote, which is significant in states such as West Bengal and Kerala.
  • Third, it looks like the BJP was under-performing electorally even before the horrendous surge in COVID infections and deaths might have turned voters against it. It is fair to assume that its current standing with voters is probably even worse than the results showed.
  • Finally, the Indian polity remains highly fragmented. The former ruling party, the Indian National Congress continued to lose votes and only parties with a limited regional base appear able to stand up to the BJP. That fact may help the BJP maintain its overall grip on national power.

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