The Bharatiya Janata Party’s (BJP) return to power is interesting as it does reveal that notwithstanding the sceptics’ view on the economy, the people have reposed faith in the governance system in the last five years. What has really clicked for the government on the economic front considering that it was widely felt that the repercussions of demonetization would be felt at the electorate?

It has been a clear case of the government pursuing policies which balanced both the social aspects of development with the economic compulsions of growth. Policies like Make in India, goods and services tax, Insolvency and Bankruptcy Code and Real Estate Regulation and Development Act, where reforms were more in the corporate sphere and take time to work out resonated with the elites. The balance has been found in the social domain where there has been a direct connection with the masses which has worked well in the elections. Here, one can look at specific schemes which were unique that have made a difference to the people. The Jan Dhan scheme was probably the largest undertaking which has provided access to banking to a large mass of people in the country. The scheme is powerful because it has laid a strong foundation for other schemes of the government which are linked to it. Direct Benefit Transfer has been largely successful and shown that cash transfers work well if a bank account exists and the beneficiary identified as per the scheme. The inclusion of Aadhaar for identification has made the entire process robust. This has meant that actual handing of cash to the beneficiary has appealed to the voter.

Second, the focus on small and medium enterprises through Mudra loans and 59-minute loan approval scheme also struck the right cord with the people. While such schemes have existed before, the fact that there was pressure on the banks to reach out has shown that the government cares for this segment. In fact, post-GST, the government has also worked with the Reserve Bank of India to restructure loans of SMEs for a single time. Therefore, the negative effects of GST have, to an extent, been addressed. Third, the Ayushman Bharat scheme relating to health insurance has also been instrumental in directly appealing to the poorer sections of society. This has been a fairly aggressive scheme which, combined with the other schemes relating to farm insurance and life insurance, has had a direct impact on the poor. Some of these schemes were already in existence but the government was able to make them effective in terms of delivery which made the difference.

Fourth, the concept of asset creation also worked well in the Swachh Bharat scheme where people were able to see toilets built in their villages. The affordable housing thrust also meant one could actually see wealth. This approach of asset creation combined well with other direct benefits to increase awareness is what the government was doing for their lot.

Fifth, electricity and gas cylinders were two schemes that brought convenience to households as these are tangible benefits. While supply of power may not have been a new promise, the delivery of cooking gas scored well with the voters.

Last, the Union budget for FY20 announced the PM-Kisan scheme which was to give 6,000 a year to the farmers. By implementing the same and making a provision of 20,000 crore for the same in FY19 Budget, there was also a cash transfer that was provided for the marginal farmers. By upping the same in the manifesto to cover a larger population, the credibility of the scheme was established.

Therefore, in a way, it can be said that the victory of the BJP was based on economic performance at the ‘micro level’ where the party was able to reach out to the lower income echelons and provide not just promise but also direct benefits that could be felt. This more than compensated for the discomfort caused by demonetization and GST. In a way, it can be said that the BJP has shown that its policy design was all-encompassing—macro policies to clean up the economy and foster growth was the long-term goal, while direct action at the micro level coexisted to convince that the government really cared. This is the message conveyed by these results.

Madan Sabnavis is chief economist at CARE ratings. Views expressed are personal.

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