Opinion| In poll-bound India, it is raining sops for everyone
Everyone is jockeying for vantage position very early in the electoral race
On Saturday, the goods and services tax (GST) Council delivered a give away for the Indian consumer; more will follow next month. Unmindful of the annual hit to the exchequer of ₹5,500 crore—which is struggling with GST revenues well below projected levels—the Council went ahead and reduced tax rates on 22 items, of which seven were from the highest slab of 28%. Undoubtedly, it is a partial relief for the middle class, especially the neo-middle class, which has only just begun to realise its consumption aspirations.
Just days earlier, the incoming governments in Madhya Pradesh, Rajasthan and Chhattisgarh delivered on the Congress party’s election promise of loan waivers; similarly, in Telangana, a deal entailing payout of ₹4,000 per acre to all farmers at the beginning of every agricultural season to fund their input costs received a fresh lease of life after the incumbent Telangana Rashtra Samithi (TRS) party won in a landslide.
If this was not enough, the Congress party president Rahul Gandhi committed to a potentially fiscally crippling national loan waiver if elected to power in the general elections, due in less than six months. Inevitably, it has triggered a wave of competitive populism with non-Congress regimes coming up with variations of farm relief.
Tag the two together, it is raining sops. Clearly, the poll bugle has been sounded. A trifle too early maybe, but now all eyes will be on finance minister Arun Jaitley when he rises to present his final budget on 1 February. Yes, it is a vote-on-account and precedence suggests that the government should only seek Parliament’s clearance for expenditure sufficient to ensure the government functions smoothly till a new regime takes charge in May.
However, there is every reason to believe that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) will use the platform to not just recount its achievements (some of which like lowering inflation, the rollout of GST, a new bankruptcy code to deal with the bad debt problem, push to financial inclusion, formalizing the economy, electricity for all and distributing cooking gas are very impressive) but also commit to a vision statement—effectively an electoral promise. Many in the opposition are bracing for this and, hence, falling over each other to preemptively claim the populist space.
Implicitly though our politicians are doing a disservice to the Indian electorate. If populism is the only electoral weapon that will sway them, then the Congress party or for that matter any incumbent should never have lost a poll. Instead, every election is defined by a popular narrative which folds traditional fault lines like caste, religion and local concerns into it.
The question is what will be the big narrative of the next general election. In 2014, it was defined around jobless growth, rising inflation (it had clocked double digits) and big-ticket corruption scandals. Five years later, the issue of jobless growth is still key to the national conversation—and politicians are helpless as there is no quick fix solution, especially in an economy where the system is either rotten or broken (recall how bankers colluded to neutralize the demonetization exercise). The new addition to this mix is the crisis in farming. Though it is not new and has been posing an acute challenge to farmers ever since global prices collapsed since 2009, it has, by its intersection with other issues in the just concluded assembly elections, acquired unprecedented electoral potency.
An additional parameter that should influence the narrative will be Prime Minister Narendra Modi. A polarizing personality, he has inspired sections of the political opposition, especially the Congress, to bond together in a pre-election alliance. Understandable, because he has been BJP’s trump card since 2014; even when his party is defeated, Modi continues to draw traction among large tracts of the electorate. It is what psephologists call the “Modi-bounce”—something that was most visible in Gujarat, where but for his intervention the party would have suffered its most humiliating defeat.
For its part, the opposition will be very keen to blunt this advantage and avoid making it a referendum on Modi. Instead, they would want to highlight the failings like the government’s failure to preempt the farm crisis, despite sufficient warnings within its first year of assuming office in 2014. They have also worked very hard to steal from Modi’s playbook and accused the PM of corruption in purchase of Rafale fighter aircraft—however, the Supreme Court verdict blew a hole in this claim.
Clearly then everyone is jockeying for vantage position very early in the electoral race. The moot point is who will occupy the pole position when the Election Commission sounds the bugle.
Anil Padmanabhan is executive editor of Mint and writes every week on the intersection of politics and economics. His Twitter handle is @capitalcalculus.
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