British opposition Labour Party leader Keir Starmer looks on as he visits Morrisons supermarket during a Labour general election campaign event in Wiltshire, Britain, June 19, 2024
| Photo Credit: Reuters

Two polls have found the UK’s Labour party was set to win a record-breaking number of seats and the incumbent Conservatives due for a historic drubbing in July’s general election.

With voters heading to the polls in just over two weeks time, the latest pair of nationwide surveys — by YouGov and Savanta/Electoral Calculus — showed Labour set to win either 425 or 516 out of 650 seats.

Either of the results would be the current opposition party’s best-ever return of MPs in a general election.

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Meanwhile, the twin polls showed support for the Tories — in power since 2010 — plummeting to unprecedented lows, with one estimating they would win just 53 seats.

The Savanta and Electoral Calculus survey for the Daily Telegraph newspaper predicted Rishi Sunak would become the first sitting U.K. prime minister ever to lose their seat at a general election.

The poll, which forecasts three-quarters of Mr. Sunak’s cabinet also losing their seats, would hand Labour a majority of 382 — more than double the advantage enjoyed by ex-prime minister Tony Blair in 1997.

It also showed the centrist Liberal Democrats just three seats behind the Conservatives on 50, and the Scottish National Party losing dozens of seats north of the English border.

Record Tory defeat?

The YouGov survey predicted Mr. Sunak’s party would win in just 108 constituencies.

That was a drop of 32 on its prediction from two weeks ago, reflecting how badly the Conservatives’ election campaign is perceived to have gone.

The 108 seats the Tories are predicted to win in the poll would still be their lowest number in the party’s near 200-year history of contesting U.K. elections.

Mr. Sunak is widely seen as having run a lacklustre and error-strewn campaign, including facing near-universal criticism earlier this month for leaving early from D-Day commemoration events in France.

In contrast, Labour leader Keir Starmer, set to become prime minister if his party prevails on July 4, has sought to play it safe and protect his party’s poll leads.

YouGov also found anti-EU populist Nigel Farage’s Reform UK party on course to win five seats, including in the Clacton constituency in eastern England where the Brexit figurehead is standing.

Mr. Farage has said he will attempt to co-opt what remains of the Conservative party if he is elected and it fares poorly on July 4.

Whenever the U.S. 10-year bond yields rose above 4.5%, FPIs sold in emerging markets like India and moved money to bonds. 
| Photo Credit: S.R. Raghunathan

Foreign investors pulled out a massive ₹25,586 crore from Indian equities in May due to uncertainty surrounding the outcome of general election and outperformance of Chinese markets.

This was way higher than a net outflow of over ₹8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in U.S. bond yields.

Before that, FPIs made a net investment of ₹35,098 crore in March and ₹1,539 crore in February, while they took out ₹25,743 crore in January, data with the depositories showed.

Going ahead, election results, which will be out on June 4, could determine FPIs flows into Indian equities in the near future.

In the medium term, U.S. interest rates will exert more influence on FPI flows, Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

According to the data, Foreign Portfolio Investors (FPIs) made a net withdrawal of ₹25,586 crore from equities in May.

The relatively high valuations and weak earnings, particularly in the financial and IT sectors where FPIs have a high allocation, along with political uncertainties such as ambiguity around the outcome of elections, global risk-off sentiment, and the appeal of Chinese markets, have led to FPI selling, Vipul Bhowar, Director of Listed Investments at Waterfield Advisors, said.

“The main trigger for the FPI selling has been the outperformance of the Chinese stocks. The Hang Seng index boomed 8% in the first half of May, triggering selling in India and buying in Chinese stocks,” Mr. Vijayakumar said.

Another reason was the spike in U.S. bond yields. Whenever the U.S. 10-year bond yields rose above 4.5%, FPIs sold in emerging markets like India and moved money to bonds. These two factors triggered the selling in equity in India, he added.

Further, robust GDP growth, manageable inflation and political stability can create a positive outlook for the Indian economy, marking a turnaround from their net selling in May.

GDP growth numbers released on Friday painted a very optimistic picture. Q4FY24 GDP growth came in at 7.8% surpassing the 6.7% expectation, while the full-year FY24 growth stood at 8.2%.

Additionally, the record dividend of ₹2.1 lakh crore from the RBI has provided further fiscal room for the government to continue focus on infra spending.

“These factors suggest that monthly FPI inflows could exceed a sustained ₹30,000 crore (in this month) if the current government remains in power,” Kislay Upadhyay, smallcase manager & Founder of FidelFolio, said.

Shailesh Saraf, smallcase Manager and CEO of Valuestocks, said: “We are extremely bullish on the Indian markets as we are expecting the ruling party to come to power once again. Also if we look at the corporate profits for March 2024, there has been a 10% Year-on-Year increase…which bodes well for the markets”.

On the other hand, FPIs invested ₹8,761 crore in debt and ₹4,283 crore through debt-VRR (Voluntary Retention Route). Before this, foreign investors put in ₹13,602 crore in March, ₹22,419 crore in February, ₹19,836 crore in January.

This inflow was driven by the upcoming inclusion of Indian government bonds in the JP Morgan Index.

Market experts believe that long-term outlook for FPI flows into Indian debt is positive due to India’s inclusion in global bond indices.

However, near-term flows are being impacted by global macroeconomic uncertainty and volatility. Overall, FPIs withdrew a net amount of ₹23,364 crore from equities in 2024 so far. They however invested ₹53,669 crore in debt market.

 

Dominican Republic President Luis Abinader was re-elected on May 19 for another four-year term, an endorsement of his handling of the economy and tough policies toward migration from Haiti.

The two nations share the Caribbean island of Hispaniola, but the much more prosperous Dominican Republic stands in stark contrast to its poverty and gang violence-plagued neighbor.

The volatility across the border has been a key issue in the election campaign, but Mr. Abinader, 56, also boasted success in managing the economy and the Covid-19 pandemic.

As the number of ballots counted passed 21%, his main rival, former president Leonel Fernandez, conceded defeat and congratulated Mr. Abinader.

“I am and will be the president of all Dominicans,” Mr. Abinader said in a speech before hundreds of supporters at his campaign Headquarters in the capital Santo Domingo.

“The people have expressed themselves clearly… I accept the trust I have received and the obligation not to disappoint,” Mr. Abinader said shortly after his two top rivals, including Mr. Fernandez, threw in the towel.

“I will not fail them,” he told supporters, who chanted “Four more years! Four more years!”

With 25% of votes counted, Mr. Abinader was ahead with more than 59%, fully 30 points clear of Fernandez, with 27%. A win with more than 50% of the vote is required to avoid a runoff.

Mr. Abel Martinez was in third with 10.7%, while the other six candidates barely topped 3% of the total.

‘Things can improve’

Mr. Abinader is a U.S.-trained economist of Lebanese descent and multi-millionaire heir of a family tourism and construction empire.

He was elected during the Covid pandemic in 2020 on promises of restoring trust in the Government after several high-profile corruption scandals embroiling public officials in the top tourist destination.

Once in office, he began building a 164-kilometre (102-mile) concrete wall along the border with Haiti to keep out undocumented migrants.

He had more than 250,000 migrants deported in 2023.

The president enjoys domestic approval ratings of around 70% — more than when he was elected — despite international pressure for the Dominican Republic to welcome more refugees.

The migration issue has not been a divisive one in the election, with both Fernandez and Mr. Abinader backing the deportation of Haitian migrants and increased border security.

Since he came to power, Mr. Abinader has increased immigration raids and multiplied deportations, built a wall on part of the border, and closed migration from Haiti.

Voter Javier Taveras, 38, told AFP on election day that he “likes the current position of maintaining sovereignty,” though not “the abuse against our Haitian brothers.”

As for the border wall, “I don’t know how effective it is,” he said.

A Gallup poll showed 47.5% of Dominicans believe the country was “on the right path” and 40% believed the economy is doing better than before.

Maria Ramona Antonio, a 74-year-old dentist, said she believes Abinader has done well and voted for his re-election.

“Look how tourism is going, which is the best source of work for us… the roads built, those people in need who now have health insurance,” she told AFP in Santo Domingo.

Mr. Fernandez had accused the Government of manipulating growth data. The World Bank reports that the Dominican economy grew 2.5% in 2023.

“I hope for economic stability from the next government,” said voter Taveras.

Opinion polls also showed Mr. Abinader’s Modern Revolutionary Party (PRM) bound for a majority in Congress. Experts agree that the party will fare well in elections for the Senate and the Chamber of Deputies.

The party won 120 of 150 mayoral posts in February municipal elections, considered a litmus test ahead of the general vote.

“We are sweeping, we are on top,” voter Joney Dotel, a 38-year-old psychologist, said at the PRM Headquarters.

“The country continues with change, and it is in favor of democracy.”

Mr. Abinader rose to power on an anti-corruption platform. His minister of public works, Deligne Ascencion assured on May 19 that the elections were clean, despite complaints from opposition camps of vote-buying.

The country’s electoral commission reported it has not received any formal complaint of such irregularities.

If budget making is a complex task, interpreting the Union Budget can be hazardous given the amount of fine print that one has to pore over. Finance Minister Nirmala Sitharaman’s fifth Budget, and the current Bharatiya Janata Party-led government’s final full-fledged one before next year’s general election, ticks all the right boxes on the face of it. Inclusive development that ensures prosperity for all, especially the youth, women, farmers, Other Backward Classes, Scheduled Castes and Scheduled Tribes, a focus on infrastructure and investment that serves as a multiplier for growth and employment, policies to enable green or environmentally sustainable growth, the rationalisation of direct taxes, including a raft of concessions to the middle and salaried classes, and pensioners, and, most importantly, doing all this while staying the course on fiscal consolidation. Terming it the “first Budget in Amrit Kaal”, Ms. Sitharaman sounded the poll bugle by emphasising the ruling dispensation’s achievements since 2014, when Prime Minister Narendra Modi first assumed office. Per capita income, she said, had more than doubled to ₹1.97 lakh as a result of the economy’s growth to being the world’s fifth-largest and the government’s efforts to ensure a better quality of living for all. She also cited an increase in formalisation of the economy and the widespread adoption of digital technologies, especially in the payments sphere, as other significant achievements.

With an eye on ‘India at 100’, the Budget proposals, Ms. Sitharaman said, were aimed at actualising a “technology-driven and knowledge-based economy with strong public finances, and a robust financial sector”. Emphasising that the economic agenda for achieving this vision would, among other things, require a focus on giving a strong impetus to growth and job creation, the Minister laid out her Budget proposals that were heavy on this government’s trademark acronyms describing the various schemes, but relatively light on details. PM VIKAS or Pradhan Mantri Vishwakarma Kaushal Samman, for instance, would for the first time offer traditional artisans and craftspeople, or Vishwakarmas, a package of assistance aimed at helping them improve the quality, scale and reach of their products, she said. Specifics, including a financial outlay and the likely mechanics of implementation, were, however, not spelt out. Similarly, a ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’ or ‘MISHTI’, aimed at undertaking mangrove plantation along the coastline and on salt pan lands leaves the funding to a “convergence between MGNREGS and a compensatory afforestation fund”. With the rural sector’s mainstay employment guarantee scheme, one that was introduced during the Congress-led United Progressive Alliance government’s term, itself increasingly being starved of budgetary support, it is hard to fathom how the new initiative to protect and regenerate the ecologically sensitive mangroves will be funded. The decrease in outlay comes at a time when the rural economy is still to regain vigour from the ravages of the pandemic, the fallout on incomes from the uneven distribution of last year’s monsoon rainfall, and the relatively greater impact of high food inflation on hinterland households.

At a broader level, the Budget estimate for expenditure on rural development in 2023-24 is pegged at ₹2.38 lakh crore, a marginal 0.1 percentage point increase when measured as a proportion of overall expenditure at 5.3%, compared with the 5.2% in the previous Budget Estimate. When viewed against the revised estimate, the outlay is a good 0.6 percentage point lower. Food subsidy too has been sharply pared: at ₹1.97 lakh crore, it is almost 5% lower than the 2022-23 Budget estimate and a steep 31% down from the revised estimate. To be sure, the government’s resolve to stay the course on fiscal consolidation, especially after the COVID-19 pandemic had led it to spend more even as revenue receipts dipped amid the unprecedented economic contraction, left Ms. Sitharaman with little leeway on the expenditure front once she had decided that the government would concentrate its resources on increased public outlays on infrastructure and investment. Capital expenditure has been allocated ₹10 lakh crore, a 33% jump from this fiscal’s Budget estimate. If one adds the almost ₹3.7 lakh crore set aside for grants-in-aid to States for the creation of capital assets, the Minister’s laudable intent to apply the force multiplier of government capital spending as the primary lever to spur economic activity becomes clearly evident. With global demand uncertain this year on account of the slowdown in the developed economies, as the Economic Survey pertinently pointed out, India’s domestic market will necessarily have to serve as the economy’s bulwark. Ms. Sitharaman has also attempted to woo the middle class with a raft of changes in personal income tax that would, in combination with tweaks to customs duties, in total cost the government ₹ 37,000 crore in foregone direct tax revenue. Some of these changes are aimed at leaving more money in the hands of the salaried and pensioners, cash that the Budget planners hope would find its way back either as savings or increased spending on vital consumption. The biggest beneficiaries of the income-tax changes though are likely to be those in the highest income bracket, where the effective rate has been cut by 3.74 percentage points reinforcing a perception that this government bats for the affluent.

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