Do 'jobs' even matter in politics?

Some conventional wisdom about how economic outcomes affect politics will be tested on May 23

The verdicts in most recent general elections have always been interpreted on the basis of one or another set of economic factors. When Atal Bihari Vajpayee’s edition of the National Democratic Alliance was not elected after the “India Shining” campaign of 2004, most believed it was because of substantial rural distress, which followed two failed monsoons in its five years. (Inflation was also relatively low in its tenure.) Then, when Manmohan Singh won re-election in 2009, it was supposed that this was thanks to the strong growth record of the first United Progressive Alliance government. And, finally, when UPA-II was voted out in 2014, many pointed to the sharp slowdown in growth after 2011 as a reason — even though, in its last year, a cyclical revival had already begun. 

What economic factors could explain whatever results the Indian electorate throws up on May 23? There will be much punditry after the fact, but perhaps it’s better to throw out a few hypotheses and see which will match the facts that we are presented with once the votes have been counted. 

First: An old rule in Indian elections is that they are all about inflation. Prices have always been the most potent concern of voters, whether that concern is expressed through surveys or vox pops. The second UPA government in particular had to deal with spiralling inflation, partly due to historically high fuel prices. But, on the other hand, the Vajpayee NDA had presented a better record on inflation. So the record here is mixed in the past. The current dispensation, led by Prime Minister Narendra Modi, has been both fortunate and careful with regards to inflation. Fortunate because oil prices have come down sharply in the time since Mr Modi took office, easing inflationary pressure and allowing him to finance government spending without missing deficit targets too much. And careful because administered agricultural prices have not seen big increases in spite of the need to address rural distress. If there is unexpected high support for the incumbent, then it will be additional evidence for the inflation theory of politics. 

Illustration by Binay Sinha

Second, the notion that support for farmers is the determinant of the rural vote. There was never the strongest of evidence that it was a shift in the rural vote that actually dethroned the Vajpayee government, but politicians have gone out of their way to signal devotion to the farmers’ cause. The word “farmer” dominates many word clouds of the current prime minister’s campaign speeches, for example. Yet there have been considerable signs of farmer distress. Maharashtra saw massive mobilisation and multiple marches by farmers to cities. Vegetable prices have often been unremuneratively low. The early part of Mr Modi’s term was hit by sub-par monsoons. A promise to ensure that farmers receive 50 per cent above their costs does not appear to have been met in full measure. Cow protection policies were frequently mentioned by farmers as cutting into their production and their income security. Data shows unambiguously that rural wages were stagnant for much of Mr Modi’s term. And, as mentioned earlier, minimum support prices have seen only moderate increases. Although the government towards the end of its tenure controversially announced income support for farmers in an interim Budget, the amounts being paid are not considered very large. If, in spite of this, the Modi government sees robust or even increased support in the most affected agricultural areas — such as interior Maharashtra or parts of Madhya Pradesh — then it will be almost impossible to maintain the notion that support for farming is central to the practice of Indian politics. 

Third, that overall GDP growth is what matters, explaining why the UPA was first re-elected and then thrown out in 2014. Unfortunately, this election will not provide sufficient support for either side of this theory, since the current GDP numbers are no longer taken seriously as an indicator and are certainly not comparable with those that came before. The trajectory of other high-frequency data that usually moves in tandem with GDP, however, indicates that India has slowed. It is unlikely that a success for the incumbent on May 23 will be seen as a reinforcement of the notion that actual GDP growth helps political victories by anyone serious. 

Fourth, that “job creation” is central to how electorates view government performance. This has certainly been the assumption of the opposition Congress party, which has continually attacked the prime minister’s record on job creation. The latter is unquestionably dismal, as demonstrated by the leaked NSSO numbers. It is worth noting that this emphasis on “jobs” is relatively new in our politics. It is a product, perhaps, of the demographic profile of North India, with its massive youth bulge, as well as of the growth of the private sector, the spread of education, and the falling labour-intensity of production in many sectors (driven by technical change and bad policy). In other words, it is the younger, peri-urban, aspirational voter who is supposed to be most worried about “jobs” as a political issue. If Mr Modi appears to retain the support of this floating voter, which he won overwhelmingly in 2014, then it will be hard to retain the notion that “jobs” even matter as a political issue. This has a disturbing corollary. If future Indian leaders invest in job-creating policy, it will be as an aside, not as a top priority. 

Overall, a strong return to power by the incumbent government will weaken all the four “economic theories of politics” I have listed above, except for the inflation one. A relatively weak performance by Mr Modi would have the opposite effect. 

What is most likely, of course, is that many elections are not fought on economic issues at all. It is unlikely in retrospect, and particularly if Mr Modi wins by a similar margin to 2014, that that election was a verdict on the UPA’s economic performance — regardless of what my incensed fellow-columnists in the pink press would have liked to believe. Hidden social mobilisations and polarisations were likely a more important political factor then, and they are coming into the open now. This is the truth behind common voters’ justifications such as “I may not have benefited under Mr Modi, but he is good for the country”.  It is perhaps best to abandon the notion that economic outcomes are a major determinant of politics in India. Of course, it remains true that politics is a major determinant of economic outcomes. Unfortunately, this one-way traffic is not good news for the choice of economic policy by politicians going forward. 

mssharma@gmail.com; Twitter: @mihirssharma