Elections 2024: “Man Doth Not Live By Bread Alone”

Does economic performance largely determine electoral outcomes? Many economists would answer in the affirmative. Yes it is the economy, Stupid, they would echo Bill Clinton.

Not necessarily so in the case of India. The first quarter of the current financial year (QI FY25) more or less coincided with the recently concluded general elections in our country. Three months on, when we have the performance results of our economy for this quarter, it is possible to reassess this causal relationship. In the Indian context, the answer is a firm no, but first the results of the country’s economic performance.

The Indian economy reported a disappointing growth rate of 6.7 per cent during Q1 FY25. This was possibly due to subdued government spending during the relevant period. Barring this jarring note, the economy actually performed quite well. India remained the fastest-growing major economy in the world, with China, one of the other countries with which India is often compared, clocking 4.1 per cent. After a long time, private consumption showed some cause for optimism; it grew at 7.4 per cent. Despite supply chain challenges, FDI was 17.2 per cent higher than last year. Disappointingly, manufacturing activity declined from 8.9 per cent to 7 per cent, agricultural growth from 3.5 per cent to 2 per cent and services sector growth from 12.6 per cent to 7.1 per cent. But there are reasons to be hopeful for the rest of the year, as the good monsoon rains this year will boost agricultural production, rural spending and corporate investment. Production capacities, we are told, have already reached an eleven year peak, and even after a correction, the Sensex is still hovering above 82,000. Exports are currently growing at 8.7 per cent. The figures of unemployment and retail inflation stand at 3.2 per cent and 3.54 per cent.

These statistics do not indicate an economy in stress. Quite to the contrary, growth predictions of the World Bank and International Monetary Fund (IMF) for the Indian economy over the short and the medium term are pretty much in sync with them as well as the predictions of GoI and the RBI. The economic plight of the average Indian is quite good. Why then was he not enthusiastic in returning the BJP back with a thumping majority?

Some observers suggest that the people expected much more from the Modi government: although most people do not sleep hungry at night and have some kind of employment during the day, they are dissatisfied with their jobs. If this true, it will be very difficult for any future government to be really popular with the people. This is because a government cannot create jobs but can only create conditions for businesses to flourish and create jobs. Although the government could do more, business has generally flourished during BJP rule.

Some observers have suggested that the problem lay in the informal economy which successively suffered heavy losses on account of demonetisation, flawed roll out of GST, and later still, the outbreak of Covid. But equally 27.75 lakh mudra loans of up to Rs10 lakhs during the relevant period granted to 47 crore persons would have mitigated some of this suffering. This is equally true of the effect of enhanced welfare spending, financed by burgeoning income tax and GST revenues. We are thus pretty unsure about how much- if at all- arguments related to the loss of jobs and livelihoods weighed with the voter. They do not appear to have counted for much when the BJP swept the preceding Rajasthan, Madhya Pradesh and Chhattisgarh elections a few months earlier.

Non-economic factors possibly explain the performance of the party far more effectively. Political parties the world over win and lose elections on the basis of the narratives they create; more important than the truth is the voter’s perception of it at the actual time of voting. The scheduled castes in U.P. bought into the Congress narrative (developed abroad, says the BJP) that if this party returned to power with a decisive majority, it would amend the Constitution to abolish reservations. The BJP could not entirely dispel this narrative. Nor due to apathy and infighting within its own ranks and with the Sangh parivar could it enthuse its supporters to come out of their homes and actually vote. The party also failed to fully communicate the government’s impressive economic achievements- particularly those related to infrastructure development and poverty upliftment. A much higher index of opposition unity, by way of the I.N.D.I. Alliance, prevented the splitting up of the anti-BJP vote. Finally, although P.M. Modi is personally an effective communicator and administrator, his party walked into the trap of depending too heavily on him instead of insitutionalising the skills required for a thumping victory.

On the balance, the BJP vote share remained the same but fetched 63 fewer seats. The Congress, on other hand, secured a 3 per cent higher vote share and 47 more seats!

No, man doth not live by bread alone! A good lesson maybe for all future elections.

Disclaimer: The views and opinions expressed in this article are those of the author, and do not necessarily reflect the view and the position of the organisation.