Can Modi Keep Winning?

Five hundred and fifty million – that is roughly how many people went to the polls for India’s last general election in 2014. The process was conducted in cycles covering different regions of the country and took a little over a month to complete. On “counting day” in mid-May, I recall sitting at my office in New Delhi watching the election results pour in with colleagues as we huddled in front of the office flat screen television. The atmosphere was tense and electric. State by state, the people of India were handing a clear mandate to the Bharatiya Janata Party (BJP), and specifically its face, Prime Minister-to-be Narendra Modi, to usher in a new era of prosperity and “acche din” (happy days). Nearly five years later, after an exhaustive series of new initiatives, policies, and institutions, the Indian electorate is about to judge the Modi government on whether he and his party have delivered on their promise of prosperity.

In the months leading up to the general election in 2014 people from the states of Jammu and Kashmir in the north to India’s southern coastal state of Kerala were bombarded with advertisements claiming that one man would help lift the country’s economy through a series of much needed reforms. Furthermore, these ads stipulated that in choosing the BJP at the polls, Narendra Modi, the party’s choice for leading the nation, would replicate the model of governance that had catapulted his home state of Gujarat to the forefront of industrial development in the country. Placing faith in individuals rather than parties was a style of election campaigning that was unique that year and mirrored the style used by President Barack Obama in the United States. The tactics employed, including extensive use of social media, volunteer canvassing and microtargeting of voters, helped oust from power the Indian National Congress (INC), a political party that had dominated Indian politics for decades. For the first time in India’s post-independence history a party other than the INC came to power with an overwhelming majority in India’s lower house, the Lok Sabha.

The question is, has this government accomplished enough with this majority to convince the voters to give them a second term?

Economic Reforms

My colleagues and I at the Center for Strategic and International Studies (CSIS) often get asked whether Modi is a reformer. While there are many ways to answer that question, for the economy we use a scorecard (available online at http://indiareforms.csis.org) tracking the progress of the 30 most important economic reforms the prime minister could enact in order to unleash India’s growth potential. Since coming into office, the Modi-led government has completed nine of these reforms, including the passing of landmark legislation to implement a common goods and services tax (GST) across India. In addition, the government has started or partially completed 14 more reforms. The other seven reforms have not really been started.

It is important to note here that the pace of reforms has slowed over the last few years. The government enacted six reforms in the first year, but only three additional major reforms in the following three years.

The challenge for Modi and his party has always been that they lacked the legislative majority in the upper house, the Rajya Sabha, that would allow them to undertake legislative action without being checked by the opposition. Lacking a legislative majority, the prime minister has done largely what is within his power, primarily by rolling back regulations or improving ease of doing business to increase foreign direct investment (FDI) into the country – a strategy that helped boost economic development in Modi’s home state of Gujarat while he served as chief minister.

Modi has enacted FDI reforms at a faster pace – nearing 40 in 4 years – than any other prime minister of India. This has resulted in FDI inflows of over $30 billion consistently over the last four years. However, the pace of reforms to India’s FDI rules has also slowed. The most-watched reform on the docket – the privatization of state-owned Air India – has been rolled out in a manner that has made it less attractive to bidders. With no bidders for the government’s strategic divestment in Air India, the confidence in successful divestment from other state owned enterprises has taken a hit.  

The Power of States

Economic reforms and increased investment into the country are critical for India to lift hundreds of millions of people out of poverty and to provide gainful employment to the approximately 5 to 7 million people that enter India’s job market every year. In an effort to stimulate ownership of the development challenge by India’s powerful state governments, the Modi-led government adopted a policy of cooperative and competitive federalism. On the cooperative front, it started with the shuttering of the erstwhile Planning Commission of India, a centralized planning body for the government of India. In its place the government set up the National Institute for Transforming India (NITI) Aayog, which seeks greater involvement from states in decision making and serves as a forum for them to share best practices in policy and regulation design. On the competitive front the government’s policy is best illustrated by the Department of Industrial Planning and Promotion’s ease of doing business rankings, which showcases where India’s states rank in implementing reforms to improve their business environments. As more states roll out the red carpet for domestic and foreign investors to set up factories and start businesses, these rankings are meant to help stakeholders map out where to place their investments.  

States hold the key for the Modi-led government to expand its control in the upper house of parliament. By gaining legislative majority and coming into power in state governments, the central government gains partners to help implement their central government-sponsored schemes, which will have an impact on people’s everyday lives. This everyday impact ideally generates positive feedback and presumably leads to more votes for the party. Since coming into office, Modi and his party have executed a strategy that has allowed them to expand the number of state assemblies the BJP controls or has alliances in to a high of 21 (this recently dropped to 19). While these wins have not yet translated into giving the BJP a majority in the upper house of parliament, largely due to the slow nature of the turnover, they are nonetheless important for people to understand when considering what it takes to enact legislative reforms in India and why, perhaps, the Modi government was not as successful as some might have hoped.

In 2019, elections will determine the makeup of the Lok Sabha and not enough will have changed in the Rajya Sabha to affect the future central government’s ability to enact reforms through legislative action. This suggests that political alliances will continue to be key for getting legislation moved through the upper house.

Strained Alliances

Regional parties and alliances can both help and hinder the chances of implementing centrally sponsored development projects such as the reform program for state-owned electricity distribution companies or the central government-sponsored healthcare program. The BJP has succeeded in expanding its footprint across India by either winning a majority of seats or forming coalitions with regional parties that are largely part of the National Democratic Alliance (NDA). These alliances come with the hopes that powerful regional players will somehow be favored by the central government. Lack of delivery on promises or the prospects for furthering regional goals can switch up the situation, as they did with the fall out of the alliance between the Telegu Desam Party (TDP) and the BJP in Andhra Pradesh in March 2018. In contrast, in August 2017 Bihar’s Janata Dal United (JDU) party calculated that its fate would be better aligned with the BJP when it broke its coalition with the leftist Rashtriya Janata Dal (RJD).  

More recently, the BJP itself broke its alliance with the People’s Democratic Party (PDP), which had helped bring the BJP to power for the first time in the state of Jammu and Kashmir. Breaking the alliance ahead of the national elections allows the central government to take a more hardline approach to militancy in the region – something that has been on the rise over the last few years. The hardline approach may disadvantage the BJP in Jammu and Kashmir but might play well with the electorate across the country, who will see in the prime minister a leader who is proactive on security.

Two other blows to the BJP came in the form of the recently concluded state assembly elections in Karnataka and Gujarat. In Karnataka the BJP gained the most number of seats but failed to secure a majority to form a government. The INC and Janata Dal (Secular) party seized on the BJP’s lack of majority and reluctantly formed a coalition government to keep the BJP from capturing its 22nd state assembly. While it is true that the BJP made significant inroads back into this southern state, its failure to form a government has emboldened the opposition. In Gujarat, the incumbent BJP government came back to power but with 16 fewer seats. The BJP’s seat loss was heaviest in rural areas with tribal populations, indicating that the reforms enacted by the central and state government are not meeting the needs of this electorate. Further analysis suggests that the Indian National Congress has been gaining votes and that in several districts the BJP won by narrow margins.

Needless to say, opposition parties across India are seizing on the emergent cracks in the BJP’s network of alliances across the country. A grand alliance of opposition parties may make a bid to India’s electorate to choose them over the BJP. However, being largely driven by regional parties, it is unclear that the people of India can see who might lead if such an alliance was to rule from New Delhi.

Many Electorates, Many Needs

Most media-based opinion polls, such as those run by the Times Group, indicate that Modi is set to win a second term in office. Political analysts, though, will state the obvious: The majority for the BJP may not be as large as it was in 2014. Longstanding research suggests that the Indian electorate has a penchant for voting against incumbent governments. However this research needs to be revisited considering growing willingness by the electorate to vote for incumbents (particularly to reward them for economic performance).

Experience indicates that for political parties in power in India there is always a delicate balance between trying to implement reforms that benefit industries and improve the lives of people living in India’s cities and those that are required to improve the livelihoods of India’s powerful rural voters.

Modi came into office with overwhelming support from voters in rural India – a powerful force in Indian elections. It might be argued that a focus on big ticket, necessary reforms and emphasis on infrastructure projects took the government’s attention away from the needs of rural voters. They even stood by Modi when he took nearly 86 percent of India’s currency out of circulation in late 2016, a move which would have had a tremendous impact on people’s everyday lives. The popular belief was that this demonetization exercise would help check corruption of the rich by bringing a lot of black-market money back to the government. Since then, high input costs for agriculture (including diesel, electricity, seeds and fertilizer) coupled with falling prices of certain agricultural commodities has meant that many farmers are facing crippling debt – and their patience is now wearing thin.  

According to a large survey across 19 of India’s states – aptly called the “Mood of the Nation” – conducted by the Delhi-based Center for the Study of Developing Societies (CSDS) in April, the BJP’s projected vote share from farmers has declined by 3 percent since January (from 40 percent to 37 percent). This mirrors the BJP’s performance with rural voters in the state elections in Gujarat as mentioned above. Recognizing the need to focus on farmers in the lead up to the 2019 election, the government will expand the geographic reach of projects under the National Rural Livelihood Mission, which seeks to help farmers diversify their incomes and improve household financial stability. Efforts to expand access to subsidized cooking gas for rural voters is another way to demonstrate impact and is a strategy that was employed to get the BJP into power in Uttar Pradesh, India’s most important electoral state. At the expense of the utilities, state governments controlled by the BJP may also attempt to shield agricultural consumers of electricity from rising costs or fluctuations in power availability in the months leading up to the elections. This is in addition to the promise the central government made to bring electricity to every household by 2019.    

One of the most important things the urban electorate will be evaluating the Modi government for is improvements to their living environment and the prospect for jobs. For the BJP, being able to control the narrative on both is critical. On areas of improvement in urban living the central government needs partner governments at the state level to execute infrastructure projects under initiatives like the 100 Smart Cities project at a pace that will resonate with the electorate in time for them to head to the polls. Newer trains, more roads, and shinier airports may indeed leave an impression that the government has raised the living standards of people but the fact that India has 14 of the top 15 most polluted cities on the planet is also capturing many headlines. Delivery of services through digitized government platforms, which has been on the rise across India, is another accomplishment the government will tout. 

On jobs the task is more difficult and, depending on which sector one examines, the report for the BJP is mixed. While major initiatives such as “Make in India,” “Start-up India,” and “Skill India” were meant to support the growth of employment opportunities, the sheer number of jobs required in a country like India makes meeting the challenge daunting. Reports indicate that while service sector employment opportunities have been on the rise, other sectors such as mining, fisheries, agriculture, paper, textiles, manufacturing in food products, transportation equipment, and trade, have actually seen declining employment since 2014.   

The Months Ahead

In the coming months the BJP will be on the defensive, trying to retain control of legislative assemblies in Chhattisgarh, Madhya Pradesh, and Rajasthan. Rajasthan poses a challenge given the history of anti-incumbency sentiment driving voters in that state. In addition, there is an opportunity for the BJP to further consolidate its presence in India’s northeast as the small state of Mizoram heads to the polls in December.

A matter that may have grave implications for internal security and may upend political calculations is the degree of religious and cultural polarization that is permitted by BJP leadership to hardline Hindu factions within the party in the lead up to the general elections. Emergent leaders like Uttar Pradesh Chief Minister Yogi Adityanath were deployed in Karnataka in the lead up to state elections there earlier this year and may have resulted in an increased vote share for the BJP. “Hindutva” messaging plays well with some segments of society, but has created conflicts in many parts of the country and may further unite the opposition.

As India gears up yet again for the largest democratic exercise on the planet, the tasks for Modi and his coalition are clear: Tout the successes of his tenure thus far effectively, continue to focus on initiatives that will benefit the rural electorate, and navigate well or avoid any major diplomatic and security challenges. Diplomatic challenges are less within the control of the government and, depending on how much they impact the Indian electorate, may not have far-reaching implications at the voting booth.

For the moment it appears that parties within the NDA will muster enough votes to retain a majority and hand a second term mandate to Modi. Opposition parties have limited time in which to iron out their differences and float a unified vision for a prosperous India that can match the one that swept the BJP into power in 2014.