Retributions | It’s the Economy Stupid

But does it matter?

Media reports suggest that the government received a severe tongue lashing in the recent Congress Working Committee (CWC) meeting. The CWC is apparently concerned that a slowing economy in an era of high inflation and multiple corruption scandals may damage the prospects of the Congress party in the 2014 elections. Of course, there was no unanimity on what the government needs to do with opinions ranging from increasing subsidies for petroleum products to giving the stalled reform process an impetus.

But will economic growth really matter in 2014? If it does affect political fortunes, it would be an unprecedented event in the annals of modern Indian political history.  From 1950 to 1980 India grew at the rate of 3-3.5 per cent (from a very low base)—the so called Hindu rate of growth— but the Congress retained power with consummate ease except for the period immediately following Emergency (Clearly non-economic factors including Mrs. Gandhi’s dictatorial personality were predominant themes in the Jaiprakash Narain movement). And when V.P Singh captured the Delhi throne in 1989 he was again propelled by the anti-corruption crusade as well as the Ayodhya movement. Ditto for the NDA government which owed much to astute political management, fortuitous political circumstances,  and the personality of former prime minister Atal Bihari Vajpayee.

Sure elections—especially at the local level—were often won or lost on issues like price rise. But they are only symptoms of economic distress whose effects are directly felt by all voters. Growth on the other hand portends much more: rising incomes, greater employment opportunity, upward mobility, and a sense of optimism. How many times terms like unemployment rate or the number of jobs created feature in political conversations? Probably even political junkies don’t know what India’s unemployment rate is! The only time a government attempted to fight elections based on an agenda of positive economic growth—howsoever airbrushed it may have been—was 2004. And the BJP led NDA was slapped pretty badly by the voters. Since then political discourse  has been dominated by the theme that good economics is not good politics and populist schemes and politics of economic resentment win elections.

The 2014 elections might then be a significant one from a broader non-political perspective. Just like the voters of 1960s and 1970s took economic distress for granted, the voter of the 21st century has taken economic prosperity and expanding opportunities for granted. And that remains true not just for the urban voters plugged in the new economy but even for the poor who certainly have benefited from populist schemes funded by economic boom. But as the economy contracts and opportunities dwindle; as revenues decline and government is forced on a economic diet, there is a sense of resentment and disquiet which will only grow if the economy remains in a tailspin.

Broadly speaking there are essentially two models of political mobilization.  One which emphasizes patronage and pelf and has dominated Indian politics for the last 60 years. Its latest examples were how elections in Punjab and Bengal were won or how Jaganmohan Reddy has emerged as a potent political force in Andhra Pradesh. The other model, still nascent, emphasizes growth and economic opportunities and effective governance. Despite 2 decades of economic growth, it has suffered from a lack of political patronage and direct popular support. That is the reason why despite the usual platitudes the second general reforms are stuck.

2014 may begin to change that. Of course, patronage would remain the dominant political currency for the foreseeable future but there may be those who vote for a better economic future and not just better designed handouts. These voters will not decide who rules India—at least not yet. But how substantial is the number of these voters and how invested they are in the political process  may well decide the future of India’s growth story..


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.