Markets were predicting Modi's BJP to fall short of a majority in the largest state election in India, scheduled for the mid-point of Modi's 5-year term and the first poll after the controversial demonetisation drive.
Our impression following a five-day road trip in eastern Uttar Pradesh, where polling in a month-long election culminates today, was that Prime Minister Narendra Modi’s Bharatiya Janata Party has a clear lead over its regional rivals. Modi’s pro-development image and nationalist, pro-poor rhetoric spun around the demonetization drive seem to have ameliorated the impact of the caste and religious lines on which the state has traditionally voted; he remains very popular, even as the negative effects of the notes ban continue to ripple through the economy.
Modi's BJP won an overwhelming majority in the state providing a big sentiment boost to the markets as the Uttar Pradesh election was viewed as a vote of confidence for Modi and his reform agenda, and it encouraged the government to press ahead with the rollout of the key Goods and Services Tax reform. This report was an example of our on-the-ground analysis where we go to different parts of the country to survey the local circumstances.