Prime Minister Narendra Modi at a political rally in Gujarat. (Source: PM India Government Website)

India's Favored Leader Mantle Firmly With Modi Despite Cash Ban

(Bloomberg) -- India’s prime minister remained popular in Asia’s third-largest economy even after his decision to ban high value bank notes, according to a new poll that gauged public sentiment earlier this year, months before economic growth slowed sharply.

The Pew Research Center poll conducted between Feb. 21 and Mar. 10, 2017 shows Narendra Modi remains the top choice among the current national leaders. His popularity has risen in the past year, including in southern and eastern parts of India where his party has not traditionally held power. Public confidence in the economy and the overall direction of the country also improved. 

Modi has come under some stinging criticism recently for his handling of the economy and the botched roll-out of the goods and services tax, including by a former finance minister of his own Bharatiya Janata Party. The survey of 2,464 Indians was conducted prior to data that showed growth slowing to levels last seen in 2014, a development economists have blamed largely on the disruptive demonetization policy.

India's Favored Leader Mantle Firmly With Modi Despite Cash Ban

"The survey was taken before the recent slow down," said Bruce Stokes, Pew’s director of global economic attitudes and one of the report’s authors, in an email. "How public sentiment has changed in the last few months is not represented by this data. What is important is that satisfaction with the economy was widely shared across demographic groups. And trust in the government and satisfaction with democracy was correlated with economic satisfaction."

Nationally Popular

The Pew survey shows roughly nine-in-10 hold a "favorable opinion" of Modi, about 30 points higher than rival Congress party leader Rahul Gandhi. The poll said he remained popular nationwide, but was most favorably viewed in western India and southern India. There are important elections in western Gujarat in December and southern Karnataka in 2018.

The results are in line with other surveys that show Modi and his BJP as the most formidable force in Indian politics today. They are also starting as favorites to win provincial polls in Modi’s home state of Gujarat next month.

In May, the Modi and the BJP were the vote of choice for four-in-ten voters -- which would have provided a better result than the BJP’s 2014 lower house majority -- according to a "Mood of the Nation" poll of 11,373 people conducted by New Delhi’s Centre for the Study of Developing Societies.

However, Modi’s cash ban in November, 2016 -- which sucked 86 percent of currency out of circulation -- and the July roll out of GST have knocked economic growth to 5.7 percent in the April-June quarter, down from 7.9 percent the prior year, when India was the world’s fastest growing major economy.

‘Common Man’

But that might not be enough to sap Modi’s momentum.

People might think demonetization and GST were executed poorly, but there are other factors -- from caste to local candidates -- that make people vote for the BJP, said Sanjay Kumar, a director at CSDS who conducts polls in India. 

India's Favored Leader Mantle Firmly With Modi Despite Cash Ban

"The common man doesn’t understand all these issues, if the economy picks up or not, they just see if prices go up or come down," Kumar said. "People might be unhappy with the government’s policies on demonetization or GST, but they will vote for the BJP on other factors."

©2017 Bloomberg L.P.