The results of the Karnataka elections will be out today. They need to be watched not only for the political lessons they offer but also as a lead indicator of the sort of economic policy narratives that will dominate over the next few months, leading to the 2019 Lok Sabha elections.
The immediate political lesson is that the way Karnataka has voted will offer some clues about the road ahead for not only the two major national parties but also the regional parties, with the Janata Dal (Secular) acting as a proxy for the third group. The deeper political lesson will be to see how the strategies of Hindu consolidation versus regional pride have played out. These lessons should be balanced against the fact that each state has its unique dynamics—thus, sweeping generalizations are best avoided.
The Narendra Modi government has tried to keep spending as close to its tax revenues as possible. The rise in global oil prices is already putting pressure on the budget. Will a populist spending spree replace fiscal discipline in an election year?