Updated: July 16, 2016 12:02:44 am
There is a distinct possibility of the BJP taking the high moral ground and winning elections. Whether the possibility turns into reality will, to a considerable degree, depend on the manner in which the BJP conducts itself for the all-important UP electoral prize. Here are some facts that can help Prime Minister Narendra Modi and the BJP take the plunge into being a political party that people might like to like, rather than a party that people love to hate.
The latest rainfall estimate (between June 1 and July 13) is 4 per cent above normal. The India Meteorological Department (IMD) forecast for the monsoon is that it will be 8 per cent above normal. The big political and economic question is: What will happen to agricultural and overall growth in 2016-17.
Several state elections (most importantly UP) are likely to be held in February-March 2017. Both inflation and growth are important factors for the voters. A correct understanding of what is likely to happen to these two variables will likely affect both the election strategy and outcomes.
The BJP had two clear, and distinct, strategies for the Bihar and Assam elections. For the former, it relied on the appeal to the fringe elements within its fold. It lost horribly. In Assam, the BJP changed course and fought on a non-divisive platform; on a promise of growth and governance, rather than the practice of communalism and casteism — it won handsomely.
The electoral strategy in Bihar was probably affected by a gross misreading of the BJP’s success in the 2014 national election. The 2014 election was fought, and won, on a non-divisive platform, not on the basis of the fringe-element politics of communalism, beef bans, love jihad, ghar wapsi etc. The thinking of the fringe elements supporting the BJP is not very different from the thinking of the fringe elements supporting Donald Trump in the US, which we shall call the Fringe Element Trump Right or the FETRs.
With the re-introduction of the Akhlaq lynching issue into the UP political equation, the BJP is in clear danger of losing the plot. There are two political realities it needs to address. Who else, if not the BJP, are the FETRs going to vote for? If the FETRs stay at home — can’t expect them to vote for the Congress, or the BSP, or the SP — then their “lost” votes are very likely going to be replaced by some Muslim votes, and a larger proportion of middle-class votes. Hence, no loss to the BJP is envisaged with an Assam-like inclusive strategy.
A major reason for the BJP to pursue this inclusive, non-communal and non-divisive strategy is that the (weather) gods have signalled them to do so. Rains will likely help to bring down food inflation — this will help the BJP electorally, and just in time for the UP election.
But there are two elements which are more controversial: One, the GDP growth rate as it exists now, and two, the addition to this growth rate with extra rainfall. Regarding the former, most protests against the Indian GDP data are made without evidence — no proof required, as it were.
Take the recent tendentious and gratuitous criticism of the GDP data by none other than the internationally recognised experts — the Bureau of Economic and Business Affairs of the US Department of State. In my 40-odd years as an economist, I have not met a single economist citing this source for questions related to economics, let alone intricate matters of the correct or incorrect measurement of GDP growth. What makes matters worse — and don’t tell this to the biased mainstream English media in India — is that the state department report offers no evidence — repeat, no evidence — for its claim.
It possibly was influenced by Subramanian Swamy’s assertion that according to a correct reading of the Samuelson-Swamy index number analysis, the Indian GDP growth is “overstated”. What Swamy does not indicate is how many other countries (including the US) would be found overstating the growth rate by the application of the “correct” Samuelson-Swamy methods. Until we know that, there is little to be gained by stating the obvious, that is, different methods yield different estimates.
However, what is unlikely to be affected by any of these “improvements” is the addition to the GDP due to a good rainfall year after two successive bad years. This year, 2016-17 is somewhat special from the rainfall perspective because it is only the seventh time in Indian rainfall history (since 1871) that rainfall has been below 9 per cent for two consecutive years. Four such occasions occurred before 1950, a period for which reliable agricultural production data is not available. On the two occasions of successive droughts post-1950 (1965 and 1966, and 1986 and 1987) the year following the drought witnessed largish double-digit growth in agricultural output — 14.9 per cent in 1967-68 and 15.6 per cent in 1988-89.
So what about agricultural growth in 2016-17? Most estimates centre around 4 per cent agricultural growth. This is far lower than the other two comparable periods. One reason not to expect double-digit agricultural growth is that Indian agriculture is more diversified, and more drought proof than 20 or 40 years ago. This “fact” is also revealed by the 0 per cent agricultural growth in the past two drought years rather than minus 6 per cent observed in the mid-1960s or the minus 1 per cent in the mid-1980s .
A simple model of agricultural growth and rainfall (contemporaneous and lagged one year) yields an agricultural growth of 9.3 per cent for 2016-17. For 1988-89, the model predicted 13.1 per cent (versus 15.6 per cent actual) and for 1967-68 the prediction was 5.8 per cent (versus 14.9 per cent actual). Agriculture has about a 15 per cent share in the GDP, so the extra growth in agriculture is likely to add more than 1 percentage point to overall GDP growth. Add to this other factors — the pay commission outgo and improved world growth — and it is not at all unreasonable to think that 2016-17 might witness 9 per cent plus GDP growth. With this growth acceleration, and stable to declining inflation, does the BJP really need a divisive strategy to win the UP election?
It obviously does not. Such opportunities are rare — everything is falling in place for India. Good economic policies, solid growth, declining inflation and increasing foreign investment — the Modi administration has everything going for it except the belief that it is also capable of taking the moral high ground in its practice of conducting elections. Assam was one example — the nation awaits for the BJP to make it a trend.
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