Burying the ghosts of BJP’s 2004 defeat

With Narendra Modi’s epochal victory, there can be no dispute that a lingering ghost—that of the Bharatiya Janata Party’s (BJP’s) much misunderstood defeat in 2004—can now, finally, be banished to the nether world.

Within minutes of the BJP-led National Democratic Alliance’s (NDA’s) stinging and unexpected loss in 2004—and that of its ally, the Telugu Desam Party in Andhra Pradesh—a piece of conventional wisdom was born: that the incumbent party had been punished by poor and economically disenfranchised voters for a triumphalist election campaign—the now notorious “India Shining”—which trumpeted its record on the economy.

This received and often recycled wisdom had the character of a morality tale, which is why it became irresistible to commentators searching for a satisfying explanation for the BJP’s defeat. The truth—that a combination of idiosyncratic factors, including an overly long campaign and sheer bad luck—was the real culprit, didn’t make for convincing columns in the opinion pages.

Sometimes, the truth is just plain boring.

Unfortunately, this flawed nugget of folk wisdom got encrusted into an emerging India narrative, that played perfectly with the agenda of the Congress, in particular the Nehru-Gandhi dynasty and its acolytes—which never really had its heart in economic reform—as well as sundry do-gooders from the Left, who had much to gain (and not just intellectually) from an economic policy agenda titled away from growth and towards “inclusion”.

Even worse, the BJP, in defeat, itself bought into the victor’s narrative, and recanted its commitment to economic reform, lurching to the Left, caving in to the atavistic autarchs in its own midst, and conceding intellectual defeat to the Congress and its cronies.

The year 2009 was but a footnote to this narrative, with a BJP still led by a traumatized old guard who hadn’t recovered from, nor correctly analysed, the lessons of 2004.

It’s finally in 2014, with Modi’s emphatic victory on the back of an election campaign premised on economic development and good governance, that the BJP itself, and the nation, can move beyond the damaging legacy of this ruinous misinterpretation of our recent history.

Nor let us be side-tracked by the entirely legitimate but quite separate debate on whether Modi will be an economic reformer in the mould in which economists such as me would like to see him, or whether his commitment is rather to an ideologically “neutral” understanding of efficient administration and a business-and investor-friendly regulatory environment.

No: the salient point in this context is that Modi’s victory banishes the well-worn cliche of political commentators that “good economics is not good politics”. Modi himself telegraphed this homily to be a fallacy early on, by pointing to the congruence between economic development and his own political success in Gujarat.

On the flip side, the outcome represents an emphatic rejection of the Congress’s brand of welfarism, which, particularly in the last few years, substituted redistribution for growth and made upliftment from poverty contingent on patronage from the centre, not economic opportunities bubbling up from below.

If initial reports are to be believed, and Rahul Gandhi attempts to retool the Congress to be even further to the Left-of-centre in a bid to recapture power in 2019, he will be like a bad gambler who doubles down when he’s losing, rather than rethink his strategy or walk away from the table.

If, instead, the Congress does manage to rid itself of the dynasty and its failed socialist ideology, and India does turn decisively to the right for good, then we will truly have achieved our “Modi moment”.

Vivek Dehejia is a professor of economics at Carleton University, Canada.

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