Modi's three-pronged challenge
INDA•Indian Prime Minister Narendra Modi faces youth protests, strained U.S. ties and renewed pressure on the rupee. The currency has remained weak despite government and central bank interventions, as foreign investors sell Indian assets and oil prices rise.
1. Domestic pressure builds
A youth protest movement known as the Cockroach Janta Party, which helped force the education minister's resignation over exam paper leaks, has turned its attention to India's chief election commissioner. Authorities detained hundreds of protesters over the weekend and cut internet services in parts of New Delhi during demonstrations against a review of electoral rolls. More than 130 million names have been removed from voter lists since the changes began last year.
2. Tensions with Washington
Trade talks between India and the United States have stalled, Finance Minister Nirmala Sitharaman said. A proposed U.S. bill authorizing tariffs of up to 100% on imports from countries buying significant amounts of Russian oil, including India, is seen as one factor. The U.S. has also moved to curb a labor certification program used by Indian IT firms, though analysts said those companies have reduced their reliance on sending Indian workers to the U.S.
3. Rupee and inflation pressures
Foreign investors have sold Indian assets at a record pace, with high oil prices weighing on the economy and the rupee. The central bank introduced fresh measures over the weekend to curb dollar demand after a rate hike earlier in the week failed to stem the currency's weakness. September inflation rose to 5.54%, with food inflation at 7.74%; further rate hikes of up to 75 basis points are possible.
