New Delhi: A year back, there seemed to be no stopping Narendra Modi. After a landslide victory in the Uttar Pradesh elections, the Modi-led Bharatiya Janata Party (BJP) seemed to have acquired an aura of invincibility. But that aura has diminished somewhat over the past few months as anti-incumbency has grown. The BJP’s narrow victory in the Gujarat elections held in December 2017, and its losses in bypolls held in Rajasthan earlier this month have set off speculation about whether the opposition Congress party could stage a comeback in 2019.
The results of a nationally representative survey conducted earlier this year by the Lokniti research programme at the Centre for the Study of Developing Societies (CSDS) in collaboration with ABP News also suggests that Modi’s popularity may be past its peak, with approval ratings for the Modi regime witnessing a decline between May 2017 and January 2018.
What lies behind the growing disenchantment with the Modi regime? The answer may well lie in high levels of economic misery.
The Mint misery index has remained at an elevated level for most of Modi’s tenure. After witnessing a brief decline in the first half of 2017, it spiked once again in the second half.
The Mint misery index is an Indian adaptation of the misery index originally created by the American economist Arthur Okun. Okun added up the unemployment and inflation rates in the US to develop a simple numerical measure of how economic conditions affect citizens. Over the years, the index has been a popular tool to gauge the living conditions under different US presidents.
Unlike in the case of the US, credible and regular data on employment in India is hard to come by. To get around this problem, we use real rural wages (adjusting for inflation) as a proxy for rural employment levels, since wages and labour demand tend to move in tandem. For urban India, even regular wage data is unavailable. Hence, we make use of a somewhat broad indicator—non-food credit growth—which captures the level of economic activity in the period under consideration. An earlier version of the Mint misery index had used growth in gross domestic product (GDP) as a proxy for employment. But given that the new GDP series is not comparable with the past series, we avoid using that indicator.
The revamped Mint misery index is thus a composite indicator based on three key economic parameters—inflation, real rural wage growth, and non-food credit growth. The index has been normalized to take values between 0 and 100, with values closer to 100 denoting greater misery.
As the chart shows, for most of the first term of the Congress-led United Progressive Alliance (UPA) government which lasted from 2004 to early 2009, the Mint misery index remained at relatively low levels. Only towards the fag-end of the first term of the UPA did the misery index value exceed 50. It was during the end of the UPA-I reign that the impact of the global financial crisis was first felt.
It is perhaps not a coincidence that the UPA returned to power in the 2009 Lok Sabha elections. However, during UPA-II, the Mint misery index was far more volatile. And from 2013 onwards, the Mint misery index was consistently at a high level, driven primarily by high inflation but also by declining credit growth—as the pile of bad loans first began surfacing. In the first term of the UPA government, the Mint misery index had a median score of 49. In the second term, this went up to 57.
The Modi-led National Democratic Alliance (NDA) government came to power in 2014 partly because of its promise of alleviating economic misery and ushering in good times or Achhe Din. However, the record so far has been far from impressive, the trajectory of the Mint misery index shows. While the NDA government won an early battle against inflation, its reign has been witness to anaemic credit growth and a sluggish rural economy for a long stretch of time. The median Mint misery index score during the NDA rule so far at 64 is even higher than the UPA-II average of 57.
It is perhaps not so surprising therefore that patience with the Modi regime is wearing thin. The proportion of respondents dissatisfied with the Modi regime has seen a sharp increase since the summer of 2017, the Lokniti-CSDS survey data shows. And in a dramatic reversal since the last survey conducted in May 2017, a near-majority of respondents now believe that Narendra Modi has failed to deliver on his electoral promise of bringing in good times or Achhe Din.
Although Modi continues to remain the most popular leader and the BJP the most popular party across the country, the popularity of both has declined since May 2017. Over the same period, the popularity of the Congress and its president Rahul Gandhi has grown.
With Lok Sabha elections still a year away, it is difficult to say which way the winds will blow then.
But unless the Modi regime is able to alleviate economic misery meaningfully over the next few months, it may well have to face angry voters at the hustings next year.