India’s State Elections Weaken Modi’s Hand

The results of elections in three crucial states in India, where the ruling Bharatiya Janata Party (BJP) of Prime Minister Narendra Modi lost might end up weakening Modi’s hand ahead of parliamentary elections scheduled for 2019.

The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) headed by Prime Minister Narendra Modi suffered one of its biggest defeats in recent years with the party losing power in three key states of Chhattisgarh, Madhya Pradesh and Rajasthan. The BJP faced incumbency in all three states, especially in Chhattisgarh and Madhya Pradesh where the party had been in power for 15 years. Rajasthan, on the other hand, has a history of voting out the party in power after only one term.

These results bear a striking resemblance to the outcome of midterm Congressional elections in the United States. In both, voters appear to be rebuking the government at the federal level for not living up to its promises on major policy issues. In India’s case, there is unease on the economic front. They also appear to be backing off from the move towards identity and, in India’s case, communal politics. 

These state elections, coming six months before the 2019 parliamentary elections, were referred to as the “semi-finals” by segments of the Indian media. These three states comprise the Hindi-speaking heartland and have historically been part of the BJP stronghold. To put it in context, in the 2014 parliamentary elections the party won 62 of the 65 parliamentary seats from these three states.

Over 8500 candidates fought for 678 assembly states seats across five of India’s states that went to the polls last month. The results were declared on Tuesday December 11th and in each case the incumbent government lost power. The main opposition party, the Indian National Congress, led by Rahul Gandhi, won 68 out of 90 assembly seats in Chattisgarh, 114 out of 230 in Madhya Pradesh, and 99 out of 200 in Rajasthan. In southern state Telengana the Telengana Rashtriya Samiti (TRS), that championed the movement for the formation of this state, won 88 out of 119 seats and in the northeastern state of Mizoram the Mizo National Front won 26 seats.   

The 2014 parliamentary elections in India that brought the Narendra Modi-led Bharatiya Janata Party (BJP) back to power, after ten years in the wilderness, reflected the desire of a young Indian electorate that wanted robust foreign policy (and economic reform). Mr. Modi was brought to power not because of any Hindu wave or the illusionary Hindu vote bank but he came to power on the strength of the moderate voter. That voter sought the Gujarat model of economic growth, not religious and social arguments amid violence.

The election of Mr. Modi in May 2014 raised expectations around the world of the likelihood of far-reaching changes in India’s economic policy. India was, for the first time in its history, being led by a conservative government with a clear parliamentary majority and a Prime Minister with prior governance experience. Before his election as Prime Minister, Modi successfully diminished concerns about the religio-cultural conservatism of his party. Modi was expected to be a catalyst for India’s economic growth, removing the shackles of over-regulation quickly.

However, over the last four and a half years the government’s legacy on the economic front has been caution when it comes to taking much-needed economic reforms. In the words of The Economist in June 2017 Mr Modi was “more of a nationalist firebrand” than an economic “reformer.”

The first two years of the Modi government, instead of taking advantage of factors like lower global oil prices, to implement economic reforms the government assumed that good times will remain. India remains one of the fastest growing economies in the world, but over the last few years economic growth slowed down and only in 2018 has it hit 8% once again. Further, the unorganized, small business and rural sectors, have yet to recover fully from the disruption they faced because of the policy of demonetization implemented in November 2017.

This is not to say that no economic reforms have been implemented in the last few years. The implementation of GST (Goods and Services Tax) will help in the long-term and so will reforms like the Bankruptcy code. However, in the short-term the GST only added to the confusion and stress faced by the small and medium sectors of the Indian economy.

Ignoring that in 2014 they had promised massive economic reforms on the platform of ‘minimum government, maximum governance,’ the BJP-led government assumed they had come to power on a multi-generational wave of change that would ensure they would stay in power for at least a decade or more. This it was argued would only happen once the BJP obtained a majority not only in the Lok Sabha, lower house of parliament but also the Rajya Sabha, upper house, for which it needed to win more state assembly elections.

The NDA lost the Bihar elections in 2016, though subsequently Chief Minister Nitish Kumar decided to rejoin NDA, providing the BJP with much needed political backing. In Uttar Pradesh, the BJP swept the elections in 2017 and chose Yogi Adityanath – the head priest of a Hindu monastic order, the Gorakhnath math- as the chief minister.

These victories, however, did not result in a move towards economic reforms. Instead the focus remained on identity and cultural issues – from rewriting textbooks to eliminate mention of Muslim rulers, to mass conversion programs seeking to convert Muslims and Christians to Hinduism, and killings and lynching associated with banning cow slaughter and the consumption of beef.

The conversion campaign is described as reconversion or ghar wapsi (return to home), based on the argument that all Muslims and Christians in India were once Hindu. It implies that being Indian is the same as being Hindu and those who changed their religion over time, embracing the faith of India’s conquerors, must return to Hinduism to be prove their patriotism. Ironically, this is historically wrong as Muslims and Christians existed in India long before conquerors of those faith came to power in the subcontinent.

Most significantly, none of this has relevance to geo-politics or geo-economics.

In 1991 the changing global landscape – the end of the Cold War, collapse of the Soviet Union – and a domestic economic crisis – balance of payments and foreign reserves – led the then government led by Prime Minister Narasimha Rao to implement massive economic reforms that liberalized India’s economy. Three decades later India has yet to implement the second set of reforms that will cover the key areas of land, labor, capital and production.

Politics is not an independent silo; it is impacted by what is happening on the economic and social fronts. If there is a rise in religious intolerance and communal violence, if daily economic activity is impacted, that will impact how people vote.

If all people wanted was top down management and trains running on time, people would have approved of Indira Gandhi’s emergency measures in 1977; instead they voted her and her party out of power.

The BJP lost the three state assembly elections, but it retains its support base and put up a strong fight winning around 40 percent of the vote share. If it seeks to come back to power in 2019, Mr. Modi will need to tackle issues of governance and implement the economic reforms promised in 2014. Similarly, if the opposition seeks to continue its current momentum and gain seats in the 2019 parliamentary elections it will need to perform on the economic front in the states it has just won.