India Elections & Growth Promises

Prasanth Aby Thomas
Published: May 2014

Economic policy is a decisive factor in the 2014 elections, and political parties are scrambling to come out with promises of growth boosting measures.

There is no doubt that this year’s General Elections are the most exciting that India has ever seen. Reasons for this are numerous, ranging from the raging debates on corruption to the emergence of new leaders in the Opposition who are being considered as serious contenders for the top job in Indian politics. But, perhaps the most significant reason for excitement is something else – the economy. Unlike previous elections, this year’s voters are looking at a world that has changed at a rapid pace. They are not just witnessing the change, they are exposed to it constantly, through electronic media, the Internet and more importantly, the social media networks.

A significant point here is that the 2014 elections would be the first time when a number of youngsters who grew up exposed to the cyber world would be casting their votes. This is because, although popular websites like Twitter and Facebook began in 2004 and 2006, it took quite a few years for them to spread their roots in India. Although a rather crude version of the social networking site named Orkut was present in India early on, its functions and outlook did not encourage usage beyond keeping in touch with friends.

Of course, this group of ‘just-turned-18’ is not the only one who is going to be influenced by the social networking sites. Youth as a whole are actively involved with it. Understanding this, politicians, parties and party workers are aggressively promoting their views and trying to gather support.
Coming back to the main point, due to substantial exposure that these media provide, it has become easy for people to compare India and its conditions with other countries. Also, the economy has improved over the years, producing quite a few salaried common men who can afford to go abroad for a holiday once in a while and see where India needs improvement.

These aspects, and a few others, point to the fact that Indians are looking for more efforts from their government to boost the economy and improve the living conditions.

Some might argue that such a trend is restricted to the cities alone and that the rural India has problems of its own. Although this is partly true, one cannot deny that the rural India, which remained reclusive from a lot of mainstream activities until recently, has started to open up. These days more and more youngsters from villages go to the cities to study and find work.

eco-factTo be fair to the political parties, they do realize the importance of an economic policy in their election manifesto. At the time of writing this article, the parties are yet to table their election manifesto. But several media reports have pointed to the main points that might be included.
The ruling party remains at a disadvantage here. Although they had ample years to enact economic policies and reinforce their presence, a series of corruption scandals have made it easy for rivals to get the voters’ attention. Add to this, the everyday media reports of a weakening economy and policy paralysis, and it is anybody’s guess how they would manage to reverse public opinion.

Decisions like allowing the Foreign Direct Investment (FDI) in retail and other sectors have not created the effect that party members would have liked. Retail FDI, for example, is yet to take off significantly as foreign companies remain apprehensive of the fickle nature of Indian policies.

Some efforts, like the Food Security bill, appear to be passed in a hurry while other decisions point to reactive approach, as opposed to a more proactive stand that is required. Rahul Gandhi’s speech to business leaders last year that failed to focus on India’s core issues merely underscored this problem.
Needless to say, the Bharatiya Janata Party’s (BJP) main strength is its Prime Ministerial candidate, Narendra Modi and the much talked-about Gujarat economic model. According to an Economic Times report that cited BJP’s national treasurer and a Rajya Sabha member, Piyush Goyal, if elected to power, the BJP may look to apply lessons from the Gujarat development model and significantly boost the employment numbers.

It seems that BJP has managed to overtake the Congress in projecting its economic ambitions and appealing to the young voters’ need for growth. But this does not guarantee that a BJP government can be the answer to India’s problems?

In fact, there seem to be a major contradiction within the party on the economic policy front. While the conservative groups in the party remain wary of the west and opening the market to overseas investment, Modi and his supporters try to project a pro-business image, looking to attract foreign funding.
Apart from this, some of the points put forward by the party even appear opportunistic. For example the BJP vehemently opposed FDI in retail when UPA government introduced it, but the party had to admit that in the 2004 elections manifesto, NDA had proposed 26 percent FDI in retail.

Another party worth mentioning here is the new kid on the block, the Aam Aadmi Party (AAP). AAP’s decision to slash electricity fare and provide free water in Delhi had alarmed businesses, although some people dismissed it off as populist gimmicks ahead of the General Elections. Arvind Kejriwal had to clarify to India Inc that he was not anti-industry, saying that his party was not against capitalism, only against crony capitalism.

Interestingly, given the global economic scenario, it is not just Indians who are keenly following developments here. Foreign governments and corporates are keeping a close watch as well, due to the increasing importance of India as a potential market. The 2014 elections may decide India’s path as it struggles its way up the economic ladder but we will have to wait and see who would come out with the winning hand this time, and even if they win whether they keep their promises.