High-fives for Mr Modi

Thirty years ago, the transition from a Congress-centric political system began as Hindu qua Hindu mobilisation got under way. The quarter-century that followed was an interregnum that saw the birth of new caste-based and regional parties, and a succession of coalition governments. Now the transition is complete, with the Bharatiya Janata Party (BJP) virtually embedded in the northern heartland and in the western states, and spreading its reach east and south to become a truly national party. Prime Minister Narendra Modi and party president Amit Shah have formed an impressive team, and should congratulate themselves on a comprehensive victory that carries with it more-than-usual significance. 

Few had thought it possible during the campaigning that the BJP would increase its vote share as well as seats tally. Many believed that the party’s 2014 victory, emphatic as it was, was a fluke since a fragmented Opposition gave the BJP a single-party majority on the back of just 31 per cent of the vote. The party’s string of setbacks in recent Assembly polls and by-elections, plus some coalescing of Opposition parties, had led them to conclude that 2019 would see some slippage in the BJP’s performance. As it has turned out, the combination of high-touch government programmes, demonstrative leadership, effective oratory that drilled home key themes, overwhelming financial muscle and mobilisation of ground troops has worked seamlessly to deliver even better results than before, while blunting the Opposition’s attacks on economic under-performance and corruption. 

Mr Modi’s role has of course been pivotal. This is manifest in the big difference in voting for Parliament and Assembly — not just in the four states where the party performed sub-optimally a few months ago in Assembly elections, and where it has performed so impressively now, but also in Odisha, where Assembly and Parliament elections were held simultaneously. Voters are willing to look at alternatives when it comes to state Assemblies, but vote more for the BJP when they look for national leadership. We are back to the overarching presence of a dominant political figure with nationwide appeal, reminiscent of Indira Gandhi. 

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Indira Gandhi hard-wired a kind of unproductive state socialism into the country’s thinking process, from which it is still to free itself. What will Mr Modi do? On the economic front, he has merely tinkered so far, while on the social and political planes he has already changed much of the country’s DNA. As he steps out triumphantly for a second innings, the majoritarian impulse has gone from being politically incorrect to aggressively respectable, even as the Left and liberals resist ineffectively. Though no de jure institutional arrangements may be immediately attempted, a long-delayed resolution of the Ramjanmabhoomi dispute is awaited, and the Kashmir Valley is in tense limbo. What action-reaction sequence awaits on these issues remains hidden in the pregnant folds of the future.

Meanwhile, Rahul Gandhi’s unconvincing leadership of the Congress has left it where it was, as a rump, falling short of 10 per cent of the seats in the Lok Sabha and therefore unable once again to formally claim leadership of the Opposition. The dynastic illusion that throwing Priyanka Gandhi into the fray might achieve something has been properly exposed, most emphatically and embarrassingly at Amethi. If anything, her induction gave more grist to the Modi mill as he hammered away at entitlement politics. It is hard to see how the Congress can extricate itself from its predicament. It can’t survive without its dynastic leadership, and won’t prosper with it.

The smaller parties feel the squeeze even more than the Congress in West Bengal, Odisha, Telangana, Bihar and Maharashtra. Once important entities like the Rashtriya Janata Dal and the Nationalist Congress Party have been all but decimated, and the Telugu Desam will be lucky to get a single seat in the House. Others, like the Trinamool Congress, the Biju Janata Dal and the Telangana Rashtra Samithi, can feel the BJP closing the space available to them. These single-leader or single-family parties, born mostly in the 1990s, may be an endangered species if the BJP continues its juggernaut journey. Already, the country is back to being a single-dominant party democracy. Indeed, a two-thirds majority for the BJP-led alliance is almost within reach and, given the party’s everything-goes approach to buying support, could well be engineered in the coming months.

The stock market has given a high-five response, first to the exit poll numbers and now to the actual vote and seat tallies. Guaranteed government stability is a matter of relief for investors, but profit-booking is also in evidence — as should be expected at current valuations. Expectations of further bullishness should be tempered by the knowledge that difficult economic challenges lie ahead. Expect a cold shower when the January-March numbers for quarterly gross domestic product get published next week. The Budget, when it is presented, will be an eye-opener on how little wiggle room the government has for tax cuts to stimulate flagging consumption. The government also has little money to sustain its push for infrastructure investment, while private investment is hobbled because many leading companies and their promoters are still focused on deleveraging. Salvation could come from the Bimal Jalan committee, which is considering how much of the Reserve Bank’s reserves should be transferred to the government.

As for policy change, the question is what Mr Modi has learnt from his first term, and whether that will make him more reformist in the second — pushing for privatisation and market-oriented change. The stagnation in exports and the failure of the manufacturing initiative need to be addressed. Agriculture needs special attention, the challenge being how best to deal with the growing surpluses that have depressed prices and farmers’ incomes. The proposed codification of multiple labour laws needs to be pushed through, even as the financial sector’s problems are not over. In the wake of the shadow-bank crisis, both the availability and cost of credit have become issues for small and medium enterprises.

Cabinet formation will be watched keenly. If there are question marks over Arun Jaitley’s health, and he seeks a lighter portfolio, the choice of finance minister will be the most important decision to make. Amit Shah is serving an extended term as party president and may wish to play on new turf, in the Cabinet. Tested stalwarts like Piyush Goyal will look for meatier portfolios. Three experienced chief ministers have been put out to pasture; since the party is not brimming with talent, they may need to be inducted via the Rajya Sabha.