December 10, 2013 12:21:24 am
Headline in May 2014: AAP and Congress split the vote and BJP obtains a majority.
For a long time,or at least since Sonia Gandhi started on her experiments with populist socialism,many of us had suspected that the 2014 Lok Sabha election would herald a new and different world order. And the December 8 state poll results have transformed that forecast into a welcome and impending reality. A one-year-old baby called the Aam Aadmi Party,too young to be called David,has felled an ageing and fading Congress in Delhi. And with a little help from their prime ministerial nominee,Narendra Modi,the BJP has dispatched the same ageing,fading and toothless Congress into the record books in two additional states.
Unlike till just a few days ago,the glitterati speculation is that all dreams (and nightmares) will become reality. That the 2014 election will be a two-person presidential contest between Modi and Arvind Kejriwal. That the AAP will soon spread to the far corners of India and make the Indian spring happen. By obtaining 28 out of 70 seats in Delhi,and the BJP short of a majority by 4 seats in a 70-member assembly,the AAP is riding on hope for the future.
So are a lot of AAP supporters and the concerned middle class. But before we all get carried away,it is time to assess the AAP as a mature adult rather than a newborn baby,albeit a cute one. It has earned the respect and admiration of all. So,time now to ask the basic question: if the AAP were an important player in governance,what else will it do,besides supporting motherhood and being against corruption? Their views on economic policies provide a clue.
Economic policy according to the AAP/ Kejriwal should be as follows (obtained from interviews,manifestos,etc): GDP growth should be directly related to the lives of the people,but such growth affects very few people…. The AAP opposes privatisation,wants government in oil extraction (and much else),recommends an increase in effective taxes on the middle class and supports increases in fuel and electricity subsidies. The AAP would take measures to ensure basic facilities,for example electricity expense reduction of 50 per cent and 700 litres of free water. Further,the AAP believes in government provision of high-quality education and health,regulation of fee of private schools,implementation of minimum wage,etc.
The AAP may signal the birth of honest politics (I believe it does),but it most likely signals the birth of Luddite and extremely dishonest economics. Until I read the AAP manifesto,I believed that it was a close race between Sonia Gandhi and Hugo Chavez of Venezuela for the title of populist of the century. In her spurt over the last five years,the close race is no more Sonia Gandhi is the champion. But I now believe the title should go to Kejriwal,as revealed by his economic views as quoted above.
The other big story of Elections 2013 is the absence or presence of a Modi wave. The Congress people say no,and they provide proof by pointing to Delhi and Chhattisgarh these states show virtually no vote gain for the BJP,and indeed witnessed a marginal average 1 percentage point loss. The AAP supporters point to their giant-killing activity in Delhi and make unveiled inferences about the lack of a third alternative (that is,the absence of the AAP) in the two BJP victorious states of Rajasthan and Madhya Pradesh.
It is fun to speculate on the counterfactual,but also difficult. The only recourse one has is to look at history,and when history does not have an occurrence like the AAP (it does not in India) then one is left with a take it or leave it analysis. So here goes. Voting data for all four states is strongly indicative of an anti-Congress (not anti-incumbent) wave. And data for Rajasthan and Madhya Pradesh are indicative of the presence of a Modi wave. Note the following. First,even in Delhi,where the AAP was the big alternative,the CNN-IBN-CSDS opinion poll results revealed that at least half of those people voting for the AAP in Delhi would vote for Modi in the Lok Sabha election. And the AAPs own survey indicated that a third of the people would do so!
In a three-cornered contest,the Delhi poll resulted in the lowest ever Congress seats eight compared to 10 they obtained in the post-Emergency election of 1977. The two-cornered Rajasthan election results are even more shocking and out of the ballpark. The average number of seats that the Congress has obtained in 13 past Rajasthan elections was 92. But in the 2013 election,the BJP humbled the Congress to beat this record by a wide margin. The Congress obtained almost half of their lowest ever,and half the post-Emergency 1977 election 21 seats. (The lowest seats ever obtained by the BJP in Rajasthan was 32 in 1980).
Did the people vote in such overwhelming numbers for the BJP in Rajasthan in 2013 because they did not have an AAP alternative? I doubt it. Proceeding to Madhya Pradesh,the BJP chief minister overcame double anti-incumbency to record a third consecutive win of 165 seats,22 more than in 2008. In the outlier Digvijaya Singh loss election of 2003,the BJP obtained 173 seats to the Congresss 38. That record may never be breached,but in his third term,Chouhan has come close by granting the Congress only 58 seats.
Still no Modi wave? Then let us look at Chhattisgarh. In the 1977 election when Chhattisgarh was part of Madhya Pradesh (data for Chhattisgarh prior to 2004 from the India Today-Oxus election dataset),the Congress obtained 36 seats; in 2013,despite a battle for a third term and the horrific elimination of Congress leaders by the Maoists in Bastar,it obtained 39 seats,only one more than in 2008. Still no Modi wave?
What implications for the 2014 election? Each partys interests are different. The Congress has to attempt to become relevant; a course change is difficult,but not impossible. The AAP needs to mature into a responsible establishment outfit. And the BJP needs to pray that the AAP gets the financing to turn 2014 into a three-cornered contest. It knows that only six out of every 100 BJP voters voted for the AAP,but six times as many (36 out of 100) Congress voters did so. The math of the first-past-the-post system is well known to the BJP. If the AAP is almost the new Congress,as seems likely,then the BJP can be realistically ambitious about winning 2014 by a near absolute majority.
The writer is chairman of Oxus Investments,an emerging market advisory firm,and a senior advisor to Zyfin,a leading financial information company.
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