Much Ado About Everything No 28: India's Election ̶ The Economy vs Security

Narendra Modi faces a battle to retain an overall majority in India’s forthcoming general election.

On 10 March India’s Election Commission announced that voting in the general election for the 545-seat lower house of the country’s parliament, the Lok Sabha, will begin on 11 April and end, after seven separate days of voting to accommodate an estimated 900 million voters (details of which can be found here), on 19 May. The count will then begin on 23 May and should be completed within three days (with some predicting 24 hours).

Recall that just two years ago after the ruling Bharatiya Janata Party (BJP) had done exceptionally well in important regional elections, some were saying that not only would it win a second clear majority in the 2019 general election but that Prime Minister Narendra Modi (pictured) was even on track for a subsequent victory come 2024! However, his and his party’s prospects do not look quite so rosy today. Over the past 12 to 15 months, the BJP has struggled in regional elections, in part thanks to improved performances on the campaign trail by India’s ‘grand old’ party, the Indian National Congress (INC) and its president Rahul Gandhi. But, at least equally, the BJP has itself to blame, notably through its mishandling of both the 2016 demonetisation and the introduction of a [general sales tax](https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India%29) in 2017. Furthermore, although at the time of the 2014 election expectations of Mr Modi and the BJP (traditionally a party which has drawn the majority of its support from urban areas) were always, in my view, far too high as far as ‘fixing’ the economy was concerned, there is no question other than that India’s farmers and other rural dwellers, who make up roughly two-thirds of the electorate, have done poorly under his stewardship. This is having a clear negative impact on support for the party in Hindu-dominated parts of the north of the country where it enjoyed strong support in 2014. A recent series of policy measures to improve farmers’ lot will undoubtedly help; but the BJP is still set to shed a lot of seats in rural areas generally relative to 2014. Readers with access to the Financial Times may wish to check out Amy Kazmin’s excellent 11 March article on this.

Nevertheless, things do look brighter for Mr Modi today than they did a month or so ago thanks to recent events in and around Kashmir which have allowed his government to take a tough ̶ and popular ̶ stance on national security. As Ms Kazmin put it in a 10 March article in the FT following the announcement of the election dates:

“…India’s recent missile strike against an alleged terror training camp in Pakistan…is believed to have altered the election dynamic, boosting Mr Modi’s image, and putting national security back on the agenda.”

[Note: Security concerns, legitimate or otherwise, are at the root of the decision not to set a date as yet for the election to be held in Jammu and Kashmir.]

This will not be enough to prevent the economy and, perhaps even more so, jobs (on which the Modi government has significantly under-performed not only relative to expectations but also its pre-2014 election pledges) featuring strongly alongside security during campaigning (which officially began on the 10th). And the BJP needs to be careful how it plays the security card; it has already earned a strong rebuke from the Electoral Commission for its use of military images on campaign posters (which is now banned).

I am always very cautious about Indian opinion polls. But one cannot ignore them. Here, we need to consider the predicted fortunes of the [National Democratic Alliance](https://en.wikipedia.org/wiki/National_Democratic_Alliance_(India%29#Present_Members_and_Seats_in_Parliament) (NDA), the centre-right coalition which the BJP dominates and which currently holds a massive 341 Lok Sabha seats. Polls to date this year (with the exception of the odd apparent outrider) generally pointed to an NDA plurality until this month when at least two forecast an NDA majority, albeit of fewer than 20 seats. Indeed, March opinion polls fairly consistently suggest that the NDA is at least within striking distance of an outright majority. If this is an accurate reflection of current voter intentions, clearly there is much to play for during the campaign. And despite the much improved performance of Mr Gandhi on the stump over the past 18 months or so, Mr Modi remains a formidable opponent in what will certainly be a quasi-presidential contest.

This being said, the INC’s campaigning will, in my view at least, be boosted by last month’s decision to have Mr Gandhi’s politically savvy and charismatic sister Priyanka, previously always a behind-the-scenes campaigner, take a high-profile lead in the key state of Uttar Pradesh. But this may be more than offset by the INC’s apparent reluctance to form electoral alliances with important regional parties; this at a time when some smaller parties are trying to form an anti-BJP coalition. IF the INC were to have a change of heart, even at this fairly late stage, it could prove to be something of a game-changer.

For the time being, however, to judge by the performance of the stock market immediately after the election dates had been announced, investors at least seem minded that the next government will be led by Mr Modi even if the NDA fails to win an outright majority.

As for my personal assessment, it remains as it has been for some months now, ie that Mr Modi and the NDA will secure a second term either with a much-reduced outright majority or in a slightly wider coalition which he and his party will dominate.

Alastair Newton

www.alavan.biz

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