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December 13, 2013

The winning formula

Deciphering the winning formula for India’s elections.

Election fever has begun in earnest in India. Last Sunday, live results from four states – Rajasthan, Delhi, Madhya Pradesh and Chhattisgarh – displaced cricket as the nation’s entertainment of choice.  Throughout the day people stopped and enquired about the seat count.  Left unspoken was not the ‘what’ but the ‘why’. Why did the Bharatiya Janata Party (BJP) win Rajasthan in a landslide despite the populism of the incumbent Congress Government? Why did the Aam Aadmi Party (AAP) surge to a creditable second in Delhi and deny the BJP a majority in the midst of momentum for the BJP’s prime ministerial candidate Narendra Modi? Why did no independents win in Rajasthan? Why was Chhattisgarh as close as it was?

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These are only some of the questions that arose from one set of legislative elections.  The BJP famously won fewer seats in 2004 (and again in 2009) than the Congress on the back of its “India Shining” campaign. Many analysts concluded then that the BJP’s focus on the elite had lost it the 2004 election.  The Congress decided to fight on a rural/populism plank and won and served two full terms (the second five year term is not fully complete). That same rural/populism plank appears to be on a sticky wicket now.

So, what is the winning formula for elections in India? In a fast federalising India, there can probably be no clear and simple answers. The convenient answer is that it depends. But can any lessons be learnt from the past? India had tepid growth from its independence to the early 80s, which resulted in modest real income growth (measured by consumption since income data is imperfect).  According to Arvind Pangariya and Jagdish Bhagwati in their new book India’s Tryst with Destiny, per capita final expenditure (PCFE) remained static from 1960-61 to 1976-1977.  From that time until 2004-05, PCFE doubled.  During the same period, poverty declined from 51.3 percent to 27.5 percent.

This period was also characterised by a dramatic increase in the number of political parties and real competition for political power on the field. The early years in the period were the start of the true democratisation of Indian politics with the movement lead by Jayaprakash Narayan (JP).  On the back of high inflation, unemployment and lack of supplies of essential commodities, JP launched a peaceful campaign for Sampoorna Kranti (total revolution). In the 1980s, Kanshi Ram launched a movement to politically mainstream Dalits. With the political pot having been stirred, India plunged head long into a balance of payment (BoP) crisis in 1991. While the crisis had been brewing for nearly five years, the gross fiscal deficit of the Centre and states rose to 12.7 percent in 1990-91 and import cover was down to three weeks. On the brink of defaulting, India, under a minority government lead by P V Narasimha Rao, ushered in a series of liberalising reforms.  These reforms and subsequent ones carried out until about 2004 have resulted in the large-scale per capital real income growth and poverty reduction over the last 20 years.

Despite ushering in the reforms that we all benefit from today, Rao’s government and the Congress were overthrown in 1996 and remained out of power until 2004. Rao was undone because of severe factionalism in the Congress, charges of excessive corruption and a “criminal-politician” nexus. Following this 1996 election, there was no stable government in India until 1999.  In 1999, on the strength of a successful operation in Kargil, Atal Bihari Vajypayee formed a National Democratic Alliance (NDA) government that completed a full term. Vajpayee’s NDA continued the earlier reforms and added ones in areas such as telecom, electricity, taxes, civil aviation and highways. This frenetic pace of reform led to surprising defeat for the NDA in the 2004 elections.

And so the first question in our exploration. Does good economics lead to election wins?  From the standpoint of India’s contemporary history the simple answer to this question, rather unfortunately, appears to be that it does not. The more nuanced answer begins with the idea that really bad economic policy can definitely lead to ouster. Governments that come to power in good economic times often fritter that away by uncontrolled spending.  This uncontrolled spending (often accompanied by hubris and/or excess corruption) leads to inflation, that in turn appears to have a causal link to election loss. While many reasons are being offered for the Congress loss in the current set of legislative elections, I would postulate that the most important one is inflation that has arisen from an open fiscal tap.  This has been accompanied by hubris and corruption which have compounded the problem.  From the sole perspective of election wins, I think it is fair to conclude that “adequately good” economics is sufficient to repeat a win.  In particular, this adequately good policy must ensure that inflation remains in check and no major indicators – unemployment, fiscal deficit, current account deficit, and currency – blow out.

If good economics cannot assure a victory, can populism do so?  Evidence for or against this proposition is complicated by the fact that we are in an era of competitive populism.  The populism rank between Jayalalitha’s AIADMK, Akhilesh Yadav’s SP, Gehlot’s Congress, Raman Singh’s BJP and Sonia Gandhi’s NAC lead influence on the Union is not easily discernible. Despite a first of a kind programme to distribute free medicines, Gehlot’s Congress was trounced in Rajasthan. On the other side, there is some evidence to suggest Raman Singh in Chhattisgarh and Shivraj Singh Chouhan in Madhya Pradesh won at least in part because of their social service schemes. It seems possible to only conclude that some amount of populism is required to win, but that populism alone does not ensure victory (a message to the UPA government at the Centre?).

If adequate economics and populism cannot ensure victory, can strong identity politics do it?  This question is a lot easier. Many states are moving beyond mere caste politics. Gujarat, Kerala, Tamilnadu, Maharashtra, West Bengal, Andhra Pradesh and many others are arguably beyond it already. True, caste factors can swing vote percentages and in so doing still affect election outcomes in constituencies. Although, caste can still play a role in the uber states of Uttar Pradesh and Bihar there is the beginnings of a shift taking place even there. As my astute former colleague Navneet Munot, CIO SBI Mutual Fund, puts it, “there is a massive silent transformation from caste to class politics taking place”. While Munot’s transformation may have started, my own view is that we may go through a phase of majoritarianism versus minoritarianism played primarily through religion before we fully shift fully away from identity politics.

Can an ‘anti’ agenda work?  As the AAP has demonstrated, being against something when the public angst is high, could lead to victory.  But as evidence from the CPI(M)’s steadily declining political power has shown, being ‘anti’ cannot be a permanent political plank.

An under-appreciated political platform is to conduct yourself with all these factors in balance but by also creating an ambience where things get done in public services and where people and enterprises believe that they can get things done themselves. This “can do” atmosphere can be created with the idea of adequate economics, a dose of populism and some identity politics on the margin.  If you look at the multi-term chief ministers in India; Modi in Gujarat, Dikshit in Delhi (before the latest defeat), Chouhan in Madhya Pradesh and Patnaik in Odisha, it is this can do atmosphere without too much hubris that has assured re-election.

Odisha’s economic growth leaves much to be desired, Chouhan is a populist and Modi’s large industrial growth model reveals many gaps, but they endure.  The Congress was re-elected in 2009 because the hyper-corruption and hubris had not started and inflation was non-threating till the very end.

I believe the winning election formula is in full view.

Photo: girlpixieshoot


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