Final Test for Modi Before 2019 Polls
November 30, 2018
Two hundred million people, or roughly 16 percent of India’s entire population, is in the process of electing their next representatives to five different state assemblies. In this final round of state assembly elections before the national elections of 2019, the ruling Bharatiya Janata Party (BJP) must play defense in three large states, Madhya Pradesh, Rajasthan, and Chhattisgarh, which have combined state domestic product of roughly $305 billion. India’s well-wishers hope voters choose candidates with smart reformist tendencies. A combined total of 89 reforms, policies, and initiatives were launched by the five governments. On December 11, we will learn whether their efforts were sufficient to keep the incumbents in power.
What is at stake for the BJP? Having cooperative state governments (those ruled by BJP or an allied party) can bolster the central government’s development priorities and reform agenda. In addition, the results of these elections, while not conclusive, may serve as bellwethers for whether the nearly 65 parliamentary seats from the electorally important states of Madhya Pradesh, Rajasthan, and Chhattisgarh will ultimately go to the opposition Indian National Congress (INC) party or to the BJP in 2019. The INC also needs to demonstrate that it is still a relevant major party in the lead up to the national elections—something within its grasp with these state elections. To better understand the issues at play, I highlight issues important to voters and noteworthy policies and reforms that incumbent state governments have rolled out in the past two quarters to bolster their economies.
The Vasundhara Raje-led BJP government of Rajasthan made some important strides in its early years. Notable among the reforms enacted by her government was the labor reform that raised the number of employees a business can have before it is covered by several onerous central and state government laws. Largely this would free those in the manufacturing sector who would be impacted by the Industrial Disputes Act, the Factories Act, and the Contract Labor Regulation and Abolition Act. In addition, the Rajasthan government, which had one of India’s worst-performing electric power grids, decided to franchise the distribution of electricity in some of its worst-performing districts to private firms that could improve the billing efficiency and reliability of electricity supply to customers within several of the state’s districts. These efforts could go a long way in unlocking economic growth in the state.
In the western state of Rajasthan, the election will be a test of both mainstream parties: PM Modi’s BJP and the opposition INC.— CSIS (@CSIS) December 4, 2018
Read the @CSISIndiaChair analysis of the elections in Rajasthan, Madhya Pradesh, Chhattisgarh, Mizoram, and Telangana here: https://t.co/rXkFlIKCKk pic.twitter.com/LX6m72w8lk
Unfortunately for the Raje government, a “Mood of the Nation” Survey conducted by the Delhi-based Centre for the Study of Developing Societies (CSDS) in May 2018 suggests that voters in this region of India are beginning to favor the opposition. Several other polls indicate that the election is all but lost for the BJP in Rajasthan, and this tracks well with the history of how the electorate consistently votes against the incumbent government. This is good for the INC, the main opposition party. The INC needs to secure a win in large Indian state in the lead up to next year’s national elections. Despite the steady decline in approval ratings for the BJP in Rajasthan, the Raje government has enacted 19 reforms or policy measures in the last two quarters of 2018 in the lead up to the elections this December. These reforms and policy measures have largely continued to focus on the power sector and infrastructure. This tracks patterns of Indian politicians wanting to show the electorate hard evidence of the impact of their government’s successes.
Just across the border from Rajasthan in Madhya Pradesh, the Shivraj Singh Chouhan-led BJP government has been in power for three consecutive terms. These 15 years have provided the government valuable time to execute state-wide policy reforms and infrastructure projects. Over the years, improvements in the state’s road and rail networks, urban infrastructure, and electricity access have allowed the government to brand the state as the central logistics hub of India. Yet despite these efforts, polls suggest that this will be a close match between the current chief minister and the opposition Indian National Congress party. While employment figures are hard to verify in India, according to Bloomberg Quint, one of the biggest issues is that unemployment in the state has grown by over 16 percent between 2004 and 2018. Meanwhile, the Reserve Bank of India’s statistics suggest that since the election of the current chief minister, the state’s per capita net state domestic product (in current prices) has risen from roughly $202 in 2003 to $1,128 in 2018. These figures suggest that incomes (and employment) have been steadily rising under the current chief minister. Farmers who make up 70 percent of the employed workforce in the state might see the picture differently. While early investments in the expansion of irrigation and warehousing facilities helped boost production, a downturn in the agriculture commodity markets coupled with muddled state and central government procurement policies and insufficient investments to agriculture infrastructure over the last few years have led to farmer agitations in the state. Being a large voting bloc, they could very well topple the Chouhan government from power.
In the central Indian state of Madhya Pradesh, the Bharatiya Janata Party will try to win a 4th consecutive term.— CSIS (@CSIS) December 4, 2018
Read the @CSISIndiaChair analysis of the elections in Rajasthan, Madhya Pradesh, Chhattisgarh, Mizoram, and Telangana here: https://t.co/rXkFlJ2dBS pic.twitter.com/tnVFXNvpoh
The Chouhan government has enacted 19 reforms or policy measures in the last two quarters spanning April through September of 2018 to counter the anti-incumbency and continue to support the growth of the state’s economy. The majority of the focus has been in the infrastructure sector. Notable projects include $350 million in loans to improve road networks and connectivity to rural areas. In addition, the state inaugurated the country’s first Integrated Control and Command Center for all seven smart cities in the state. This facility will help monitor and improve delivery of a range of public and private services to its citizens and improve the quality of urban life in the state. Labor policies compensating families for the loss of life of the primary income earner in the family as well as the creation of an employment bureau for senior citizens are meant to address concerns around unemployment in the state. Finally, to appease farmers in the state, the government launched a new $569 million irrigation project that will benefit 700 villages and new cash incentives for the production of certain crops to protect farmers from market price volatilities. Time will tell if these measures will be sufficient to hand the Chouhan government a fourth term in power.
Chhattisgarh was carved out of Madhya Pradesh in 2000. Much like Madhya Pradesh, the state has a three-term incumbent chief minister from the BJP, Raman Singh. Nearly 32 percent of the population of this resource-rich, heavily forested state is classified as native tribes. Unfortunately for the Singh government, according to the CSDS survey, nationwide support for the INC outpaced support for the BJP amongst India’s tribal communities. Raman Singh’s government is recognized for its early success in reforming the state’s public distribution system (PDS)—a mechanism to help people procure vital consumer food goods at rationed prices. India’s PDS has been notorious for allowing pilferage and ultimately stymieing their main purpose—to help people gain access to quality food staples at affordable rates. The impacts of those early reforms may be lost with the electorate, particularly the state’s farmers who might ultimately seal the Singh-led government’s fate. The government passed a supplementary budget in July to pay farmers a bonus for rice paddy production to counter the state’s disgruntled farmers. The rest of the government’s 14 reforms, policy measures or projects initiated between April and October this year focused largely on power and mineral extraction related projects.
The small state of Mizoram is the last bastion of INC control in the northeast. Surrounded by Bangladesh to the west and Myanmar to the east, it is considered India’s most remote state, making the task of integration with the rest of the country more challenging. The state still has its share of ethnic tensions and governance issues, so it is no surprise that governance-related reforms made up the bulk of the five reforms and policies enacted by the government in the second and third quarter of 2018. In a major move, the government has entered into an agreement with nearby Tripura state and the central government to repatriate ethnic Bru tribals back into the state after conflicts with other local tribes saw thousands of them flee to nearby Tripura since the late ‘90s. In addition, the state assembly passed the creation of a more autonomous body to govern the Hmar people of the state, laying to rest a long-standing conflict the Hmar people had with the modern state of Mizoram.
Unlike other bipolar state elections, regional parties will play a key role in elections in Telangana, Chhattisgarh, and Mizoram.— CSIS (@CSIS) December 4, 2018
Read the @CSISIndiaChair analysis of the elections in Rajasthan, Madhya Pradesh, Chhattisgarh, Mizoram, and Telangana here: https://t.co/rXkFlIKCKk pic.twitter.com/uumPcFXKra
Over the last two years, the Wadhwani Chair has been highlighting the states that are leading or lagging in implementing business reforms in India. Telangana has always emerged as a leader. Supposing that the reforms have begun to have an impact or at least resonate with the state’s electorate added to Chief Minister K. Chandrashekhar Rao’s (K.C.R) decision to dissolve the state assembly in September ahead of the completion of its full term in order to secure a victory for another full term. While rumors abound that he may form a coalition with the BJP should the party secure a mandate to govern India for another term his main challenge comes in the form of an alliance between the INC and the Telegu Desam Party (TDP) currently in power in neighboring Andhra Pradesh. The TDP broke its alliance with the BJP earlier this year over allegations that the central government failed to accord Andhra Pradesh special category status that would give it access to additional funds to help meet its development agenda. For the INC, the recent alliance with the TDP bolsters their chances of forming a coalition government in a dynamic state like Telangana. The CSDS survey suggests that neither the BJP nor the INC is in strong standing among voters in southern India, so an alliance for either of those parties with regional parties such as the TDP or the incumbent Telangana Rashtra Samithi is their only hope to bolstering their chance of governing India from the New Delhi.
The K.C.R.-led government enacted, implemented or initiated 32 reforms, policies or projects in the second and third quarter of 2018 to bolster its standing. Unlike the other states up for reelection this year, the Rao government focused their efforts on healthcare, education, agriculture, and policies meant to retain Hyderabad’s edge as an innovation hub in South Asia. These measures are likely to give the government the boost it needs to secure another term in office.
Five of India’s dynamic states are heading to the polls in what will be the final test for the BJP to demonstrate that its vision for India will unlock opportunities for the masses and therefore should be given a second term come summer 2019. For the opposition, these five state elections present an opportunity to take advantage of anti-incumbency sentiments and cast themselves as the better option for the millions who want more from the current governments. Most signs indicate that the cards are all but dealt for the Raje government in Rajasthan and the contests in Madhya Pradesh and Chhattisgarh are close. Mizoram might be the last INC domino to topple in India’s northeast while the Telangana Rashtra Samiti has cast a wide net of reforms and initiatives to keep the opposition parties from wresting control.
Kartikeya Singh is deputy director of the Wadhwani Chair in U.S.-India Policy Studies at the Center for Strategic and International Studies in Washington, D.C.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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