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New Delhi: In December 2017, the ruling Bharatiya Janata Party (BJP) received a scare in Gujarat, losing its seat share and vote share to a rejuvenated Congress party, but still managing to win a majority on its own. The winter of 2018 has been far crueller, with voters across three key Hindi heartland states voting out BJP-led governments to usher in Congress rule.

The reversals for the ruling party have effectively ended its goal of a “Congress-mukt Bharat", and thrown open the contest for 2019. More than the defeat of the BJP-led governments in Madhya Pradesh, Rajasthan and Chhattisgarh, the revival of the Congress has been striking, with voters across the three states breathing life into a party that seemed to be in terminal decline since the summer of 2014.

That year, the Congress’s tally in the Lok Sabha plummeted to a historic low of 44 seats but the party still boasted of 950 MLAs across the country, only slightly less than the BJP’s 1,115. Over the next few elections, as voters across states reposed faith in the Narendra Modi-led BJP, the Congress’s fortune declined sharply with the party’s MLA tally falling below 800, a record low for India’s grand old party. The prospects of a “Congress-mukt Bharat" and a BJP-led Rajya Sabha had never seemed closer to reality. The latest verdict has changed that, helping the Congress recover from its lows and taking its tally of MLAs close to where it was in 2014.

So what explains Verdict 2018? And what does it tell us about the new Indian voter? Unlike in Gujarat of December 2017, this time the discontent against the BJP was not just concentrated in the rural parts. The swing against the BJP has been nearly even across the rural-urban divide with a roughly 4% swing in vote share across the rural and urban parts of the four of the five states that went to polls recently (excluding Mizoram). This suggests that the anti-incumbency tide against the BJP is much more than just rural distress.

And the BJP’s failure to live up to its promise has upset voters so much that they are ready to bring the Congress party back to power. As the political scientist Suhas Palshikar observed in a perceptive essay voters do not wait for an “ideal alternative" to emerge; they pick from the available options. And they have gone back to what has been the default choice for most Indians across independent India’s history.

The voter has effectively kicked the so-called TINA (there is no alternative) factor out of the equation in what seems to be an ominous portent for the Modi-led BJP. The BJP’s big hope for 2019 was that the combination of Modi’s charisma and the TINA factor would take it to victory in the Lok Sabha elections. But the second factor may not bother voters very much, they have indicated, and even the first factor may be weakening.

While Modi still remains the most popular leader across the country, his popularity is waning, surveys show. And an analysis of his rallies and the subsequent impact on party performance in the latest elections by my colleagues Sriharsha Devulapalli and Vishnu Padmanabhan suggests that unlike in Gujarat and Karnataka, Modi failed to lift the fortunes of the BJP in constituencies he campaigned in the latest state elections. In stark contrast, Gandhi seemed to have been successful in boosting his party’s fortunes, in a break from the past.

The across-the-board swing against the BJP, the decline in Modi’s appeal, and the recovery of the Congress all seem to point to one factor: the voter is not very satisfied with Modi’s or BJP’s record.

Wageless, not jobless, growth is Modinomics’ bane

One of the central themes of Modi’s 2014 campaign was jobs. It is little surprise then that the dull job market conditions may have played a big role in the rising tide of anti-incumbency. The data on jobs is patchy and inadequate but Labour Bureau data available till 2015-16 does suggest a slowdown till that year. Even corporate job growth slowed down in the early years of the Modi government, but since then, it has witnessed a smart recovery, as a Mint analysis of annual reports filed by companies showed. However, despite the acceleration in corporate job growth, the average pace of job creation over the past four years was slower than what it was in the Congress-led United Progressive Alliance (UPA) era.

But the bigger difference between the two periods lies in the pace of wage growth. Between fiscal 2006 and 2009, annual growth in wages averaged a huge 21%. This has declined to a measly 8% over the past four years. Even after accounting for the change in inflation between the two periods, this is still a drastic fall.

Beyond the corporate sector, it is difficult to know precisely what has happened to job growth. Jobs data on the informal sector is simply unavailable. However, wage data for a significant part of the rural economy is available, and that points to a sharp slowdown in rural wage growth over the past few years.

Thus, both rural and urban India has been witnessing a sharp slowdown in wage growth over the past few years. And if we add the sharp disinflation in prices of essentials such as food items, which seems to have left even our central bankers befuddled, the evidence seem to indicate that growth in aggregate demand is slowing. Indeed, that is also the message that one gets if one compares a range of macroeconomic indicators with their past performance .

Given the issues with the new gross domestic product series , it is quite likely that the growth in the real economy has been less than what has been measured. And that has in turn slowed down wage growth. That prognosis also suggests that the answer to India’s job market problems may well lie in higher (real rather than stated) growth.

While the voter is rarely, if ever, concerned solely with economic issues, it is equally true that the voter is rarely willing to turn a blind eye to basic issues such as those of livelihoods, earnings and price rise. In fact, a Mint Misery Index based on the levels of inflation and growth over time suggests that almost all political upheavals over the past five decades have been preceded by either a slowdown in growth, a sharp rise in inflation, or a combination of the two.

2019 will also be as much about the economy as 2014 was.

This is, of course, not to suggest that we could expect either of the two parties to draw a radical roadmap to reform and revitalize the economy. No power on earth can stop an idea whose time has come, Victor Hugo once said. And right now, the idea that seems to be winning across the world is one of unabashed populism.

We have already seen evidence of this in Modi’s announcement of demonetization—ostensibly aimed at corrupt moneybags—followed by farm loan waivers, ahead of the crucial Uttar Pradesh elections of February 2017. And now the Congress president, Rahul Gandhi, has matched that populist zeal, and how! Not only have all the three new Congress-led state governments announced farm loan waivers, Gandhi has gone ahead and announced a nationwide farm waiver if voted to power in 2019. The Modi government is reportedly planning a wide-ranging farm relief plan that goes beyond debt waivers, in a bid to steal Gandhi’s thunder. Expect more of such proposals and counter-proposals in the weeks and months ahead.

Congress-yukt BJP, Hindu-yukt Congress

In his 1957 book, An Economic Theory of Democracy, the American economist Anthony Downs argued that a majority rule voting system will generate outcomes most preferred by the median voter. This creates incentives for both Left-leaning and Right-leaning forces to take centrist positions and avoid ceding the middle ground. However, if one party—through propaganda or persuasion—is able to shift the median leftwards—then it generates incentives for the other party to also shift marginally leftward since by moving in that direction it can pick up all the voters on its side of the spectrum plus some more, say, a slice of a few percent voters on the other side.

The median voter theory has been admired and critiqued in equal measure by political scientists over the years but it offers a useful prism to understand what is happening in India’s political spectrum today.

Although the BJP rode to power proclaiming a “Congress-mukt Bharat" in 2014, it effectively copied the Congress stylebook in its governance style, renaming and revamping the welfare schemes of the Congress era and then adding some of its own. The Congress is nothing if not a party of the median voter for most of India’s history, and the BJP’s top leadership lost no time in learning from the Congress stylebook of welfare-laced patronage politics. It is not surprising, therefore, that incoherence in macroeconomic policy and a sharp focus on welfare schemes have been the hallmark of the BJP’s governance style. And it is delivery on these schemes that is likely to be the fulcrum of the BJP’s campaign in 2019, although how far it will work electorally is still uncertain .

On one aspect, the BJP moved distinctly away from the Congress stylebook: social policy. It made it amply clear that it did not have much time for the question of minority rights, and suggested that such issues were highlighted by the Congress only to appease its Muslim “vote bank". In effect, the BJP managed to shift the median rightwards on social policy while adjusting itself to a leftward stance on economic policy. This seems to have forced the Congress to adopt a pronounced pro-Hindu stance in an attempt to lurch towards the new median.

This is evident not only in Gandhi’s increased demonstration of religiosity but also in the changing composition of the key Congress decision-making bodies. A Mint analysis of the social composition of the Congress Working Committee and the All India Congress Committee showed a sharp decline in Muslim representation in the two bodies since 2014. The Congress’s new strategy on social policy is also reflected in its silence on the Ram mandir issue. The party’s strategists seem to harbour the hope that the lack of any response on the party’s part will diminish the polarizing potential of this issue. The aim seems to be woo back the traditional “Ram-bhakt" of north India who may want a bhavya mandir (grand temple) in Ayodhya but may not necessarily want it built at the cost of bloodshed and riots. The party may also be betting on the post-mandir generation which may not have had any memory of the Ram mandir movement of the past, and does not consider this issue to be a priority.

In effect, both parties have moved closer to each other—in an attempt to move closer to the median—even as their rhetoric suggests the opposite. As they hunt for prospective allies in the coming weeks, and seek to retain existing alliances, it is likely that the two largest parties of the world’s largest democracy will pivot even further towards the centre. The challenge of marketing themselves differently even while offering the same package will only grow.The results of their machinations will be known in the summer of 2019, when the median voter will tell us how far the two parties have actually inched closer to her.

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