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By:

Akhilesh Sinha

25 June 2025 at 2:53:54 pm

From Ideology to Electability

BJP is blending ideology with pragmatism, elevating leaders from rival parties to power New Delhi: The growing tendency of the Bharatiya Janata Party (BJP) to elevate leaders from other parties to the position of Chief Minister represents a shift, one that reflects not only a recalibration of the party's strategy but also the evolving character of Indian politics itself. Once known primarily as a cadre-based party anchored firmly in ideological commitment, the BJP has entered a phase where...

From Ideology to Electability

BJP is blending ideology with pragmatism, elevating leaders from rival parties to power New Delhi: The growing tendency of the Bharatiya Janata Party (BJP) to elevate leaders from other parties to the position of Chief Minister represents a shift, one that reflects not only a recalibration of the party's strategy but also the evolving character of Indian politics itself. Once known primarily as a cadre-based party anchored firmly in ideological commitment, the BJP has entered a phase where political pragmatism is accorded equal importance alongside ideology. The clearest evidence of this transformation lies in the rising number of leaders who, after crossing over from other parties, have not only found space within the BJP but have gone on to occupy the highest offices of power. Names such as Basavaraj Bommai in Karnataka, Himanta Biswa Sarma in Assam, and most recently Samrat Choudhary in Bihar have come to embody this trend. Each of these leaders had prior political affiliations outside the BJP, yet after joining the party, their stature and responsibilities have grown significantly. This is not an ad hoc development, but the outcome of a carefully crafted, multi-layered strategy. At the heart of this strategy lies a decisive emphasis on "winning ability." The BJP is no longer determining leadership solely on the basis of ideological loyalty, instead, it is prioritising individuals who possess electoral appeal, grassroots influence, and the capacity to navigate complex social equations. This explains why Himanta Biswa Sarma rose swiftly within the BJP to become Chief Minister and one of the party's most influential figures in the Northeast, who spent nearly two decades in the Congress. Similarly, leaders like Pema Khandu in Arunachal Pradesh, N. Biren Singh in Manipur, and Manik Saha in Tripura underscore the party's willingness to rely on strong local faces to expand its footprint in the Northeast, even if those leaders once belonged to the Congress. In Uttar Pradesh, the elevation of Brajesh Pathak, a former Bahujan Samaj Party leader, to the post of Deputy Chief Minister reflects a similar attempt to balance social equations. Key Driver One key driver of this approach is the relative absence of strong indigenous leadership in several states. In regions where the BJP historically lacked widely accepted local faces, turning to experienced leaders from other parties has proven to be a pragmatic solution. This marks a shift away from ideological rigidity toward an acceptance of political realities. A second critical factor is the need to manage caste and regional equations. Social structures continue to play a decisive role in Indian elections, and political success often hinges on aligning with these dynamics. In Bihar, the elevation of Samrat Choudhary is widely seen as an attempt to consolidate OBC/Kurmi support, while in Karnataka, Basavaraj Bommai's leadership aligns with the influence of the Lingayat community. The third dimension of this strategy is the systematic weakening of the opposition. By inducting influential leaders from rival parties and assigning them significant roles, the BJP not only strengthens its own ranks but also erodes the organizational capacity of its competitors. The induction of leaders such as Jyotiraditya Scindia, Narayan Rane, R. P. N. Singh, and Jitin Prasada, all of whom have been entrusted with key responsibilities in government and party structures, illustrates this approach. Two Levels The BJP's model now appears to function on two distinct levels: a strong and centralized leadership at the top, and influential local faces at the state level. Under the leadership of Narendra Modi and Amit Shah, the central command remains cohesive and firmly in control, while states are led by individuals capable of delivering electoral victories, irrespective of their political past. The rise of Suvendu Adhikari in West Bengal further exemplifies this strategy. Once a close aide of Mamata Banerjee, Adhikari is now one of the BJP's principal faces in the state, forming a cornerstone of the party's expansion efforts. The message is unmistakable clear that the opportunities within the BJP are no longer confined to its traditional cadre. Any leader with mass appeal and capability can aspire to the top. This shift also reflects the party's organisational confidence. The BJP believes its institutional structure is robust enough to quickly integrate leaders from outside and align them with its broader objectives. This has enabled a blend of ideological flexibility and political pragmatism. That said, the strategy is not without its internal contradictions. For long-time party workers, the rapid rise of leaders from outside may send mixed signals, potentially creating tensions within the cadre. Managing this balance will be a critical test for the party in the years ahead. Even so, in a broader sense, the BJP's approach represents a fusion of ideology and pragmatism. Its goals are clear that secure electoral victories, expand rapidly into new regions, and systematically weaken the opposition.

Stability at the Edge of Turbulence

Amid war-driven oil shocks and a weakening rupee, the RBI opts for caution and reform.

India delivered a strong performance in 2025, with growth estimated at 7.6 percent and inflation contained at 1.95 percent, setting the stage for continued momentum into 2026. Benefiting from a ‘Goldilocks’ mix of robust growth and subdued inflation, the government presented a budget focused on long-term stability rather than short-term stimulus. Following last year’s front-loaded rate cut, the RBI was closely monitoring its impact and managing conditions with confidence.


By late February, however, the US–Iran conflict disrupted this trajectory, exposing vulnerabilities India had largely contained until then. With the situation evolving rapidly, even minor developments risked altering the assumptions behind the decisions taken by the Monetary Policy Committee (MPC). The RBI Governor’s scheduled April 8 address came amid this uncertainty, though a temporary pause in hostilities offered some relief until the committee’s stance was formally communicated.


Fiscal Derangement

The US–Iran conflict triggered a global energy and logistics crisis, pushing crude oil above $100 per barrel and straining India’s current account and fiscal stability while raising inflation risks. With 85–90 percent of oil imported, the RBI’s baseline assumed $85 per barrel, but internal models showed every 10 percent increase could add 50 basis points to inflation and shave 15 basis points off growth. To cushion the shock, the government cut excise duties on petrol and diesel, allowing oil marketing companies to absorb costs and avert an immediate inflation spike. Meanwhile, the rupee depreciated 11 percent over the year, sliding past 95 per US dollar.


Despite these pressures, India’s $696.1 billion forex reserves and strong banking fundamentals provided crucial buffers, shaping the MPC’s deliberations into a cautious balancing act between external volatility and domestic resilience.


The MPC meeting ended with a unanimous decision to keep all major policy rates unchanged. The policy repo rate was held steady at 5.25 percent, the Standing Deposit Facility at 5.00 percent, the Marginal Standing Facility and Bank Rate at 5.50 percent, while the overall stance remained neutral. The neutral stance signals that the RBI is neither in a tightening nor easing cycle but has preserved the flexibility to respond to shifting geopolitical and inflationary pressures. By maintaining a stable repo rate environment, the RBI has provided predictability for borrowing costs, which is crucial for the domestic lending ecosystem.


Beyond interest rate decisions, the RBI unveiled structural reforms to reinforce governance and efficiency in the financial system. Bank boards will now focus more on strategy and risk oversight, while regulatory simplification has consolidated over 9,000 instructions into 238 Master Directions with streamlined supervisory guidelines. MSMEs will gain faster credit access through the removal of due diligence requirements for TReDS onboarding, and a new framework for categorizing NBFCs into middle and upper layers ensures proportionate oversight for systemically important institutions. Together, these measures reflect the RBI’s calibrated approach of maintaining stability amid uncertainty while advancing reforms to strengthen the resilience of India’s financial system.


Cautious Recalibration

The RBI’s growth outlook for FY 2026–27 reflects a cautious recalibration in light of the US–Iran conflict. While growth in FY 2025–26 was estimated at a robust 7.6 percent, projections for FY 2026–27 have been moderated to 6.9 percent, signalling the impact of supply-side shocks and global uncertainty. The quarterly trajectory suggests slower growth in the first half of the year, with Q1 and Q2 expected at 6.8 percent and 6.7 percent respectively, before a recovery in Q3 and Q4 to 7.0 percent and 7.2 percent.


Governor Malhotra observed that while India’s domestic fundamentals were strong before the conflict, conditions worsened as the crisis escalated in March. The slowdown was driven by rising input costs from higher energy and commodity prices, logistical bottlenecks caused by disruptions in the Strait of Hormuz, weaker external demand amid slowing global growth, and investment delays as corporates adopted a cautious stance.


Despite these challenges, the RBI expects growth to regain momentum in the second half of FY27. This recovery is likely to be supported by the continued strength of the services sector, the benefits of GST rationalization, and the resilience of financial institutions with solid balance sheets that ensure steady credit flow. The government’s push to expand domestic manufacturing in strategic sectors is also seen as a durable driver of growth, reinforcing confidence that India’s medium-term trajectory remains intact even against geopolitical turbulence.


The RBI’s inflation outlook for FY 2026–27 reflects the new reality of elevated oil prices and disrupted supply chains. Headline CPI inflation is now projected at 4.6 percent, slightly higher than earlier estimates of 4.5 percent. The quarterly trajectory shows inflation remaining contained in the first half of the year, with 4.0 percent in Q1 and 4.4 percent in Q2, before peaking at 5.2 percent in Q3 as second-round effects of the energy shock feed into broader prices. A moderation to 4.7 percent is expected in Q4, keeping inflation within the 2–6 percent tolerance band.


Governor Malhotra emphasized that inflation targeting remains anchored to the 4 percent goal, but the focus has shifted to understanding the sources of inflation and preventing spillovers into core components. In this context, the RBI is “looking through” the immediate supply shock while remaining vigilant against its persistence. The central bank’s credibility is underscored by the fact that, despite the war, headline inflation is expected to stay within the mandated band.


The duration of the West Asia conflict will be critical, as prolonged high energy prices could force policy tightening. The monsoon’s performance, particularly under the shadow of potential El Niño conditions, poses a significant risk to food inflation, which has so far been contained by strong rabi output. Global commodity cycles beyond oil also remain volatile, adding another layer of uncertainty to the inflation outlook.


Steady Rates

The MPC’s decision to hold rates steady, coupled with its neutral stance and accompanying regulatory reforms, is expected to deliver distinct outcomes across different horizons. In the short term, the immediate effect is stabilization of market sentiment. By avoiding a rate hike, the RBI has shielded businesses from higher borrowing costs at a time when supply shocks are already straining margins. The decline in bond yields following the announcement underscored how well the “pause” was received by fixed-income markets.


Over the medium term, particularly in Q2 and Q3 of FY27, the decision will be tested as inflation is projected to climb toward 5.2 percent. The central bank’s challenge will be to prevent this headline spike from spilling into core inflation and unsettling household expectations. The neutral stance provides flexibility, allowing the MPC to act decisively if conditions worsen in the months ahead.


In the long run, the measures are designed to strengthen structural resilience. Governance reforms, regulatory consolidation, and improved oversight of financial institutions aim to build a sturdier foundation for the economy. These initiatives are intended to support a return to a growth trajectory above 7.6 percent once geopolitical pressures ease, underpinned by a stable macroeconomic environment and a stronger domestic manufacturing base. In essence, the RBI’s calibrated approach seeks to balance immediate stability with long-term durability.


The West Asian conflict has unsettled India’s economy, with government measures offering only limited protection if the crisis drags on. The Prime Minister even cautioned it could resemble a Covid-like disruption, demanding preparedness. The first round of talks between Iran and the US has collapsed without much progress, and any hope of an immediate consensus appears remote, particularly in the wake of the erratic and confrontational posture of Donald Trump.


In this uncertain environment, the RBI has chosen to keep policy rates unchanged while intervening to manage currency volatility to contain risk. This measured stance underscores confidence in India’s resilient domestic fundamentals and its commitment to long-term stability. As Keynes aptly remarked, “It is better to be roughly right than precisely wrong.” Guided by this wisdom, the RBI’s cautious approach seeks to safeguard the economy’s strengths and ensure they endure over time


(The writer is a Chartered Accountant with a leading company in Mumbai. Views personal.)


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