The Hindu Business Line : Economics or emotions, the poll toss-up

There is a strong possibility that many economic issues that will be raised during the coming election campaign would not have much of an impact. What might matter much more to the electorate than bread-and-butter issues may be such aspects as perceptions of political stability and leadership qualities, says Paranjoy Guha Thakurta.

THE Bharatiya Janata Party-led National Democratic Alliance Government is hoping that the economic revival resulting in a so-called feel-good factor would ensure that the electorate returns the Atal Bihari Vajpayee regime to power in New Delhi for another five years. The extent to which voters would be influenced by the media hype about the current state of the economy — including the expensive "India Shining" advertising campaign of the Ministry of Finance — remains to be seen.

Interestingly, the political opposition to the BJP and the NDA is also expected to stress bread-and-butter issues in the weeks ahead. So, will economics rather than emotions carry more weight with the country's voters? The answer to this question is not clear. There is a strong possibility that many economic issues that would be raised during the coming election campaign would not have much of an impact. What might matter much more to the electorate may be other issues, such as perceptions of political stability and leadership qualities.

In the run-up to the 14th general elections that are likely in April, the BJP and its allies are seeking to emphasise the working of the economy as one of the most important issues before the country's citizens. Talk of Hindutva is conspicuous by its absence, that too in a party that considers the Rashtriya Swayamsevak Sangh as its ideological parent.

Since the outcome of the December 2003 elections to the Assemblies of Madhya Pradesh, Rajasthan and Chhattisgarh were known, many functionaries of the ruling party have come round to the view that issues of governance — bijli (electricity), sarak (roads) and pani (water) — are the ones that really concern voters.

Herein lies the first set of problems. Roughly half the households in India do not receive electricity or running water — so says a detailed survey that was conducted together with the 2001 Census. The Prime Minister's highway construction programme may have provided a boost to the economy but its impact on the lives of those living in remote rural areas may not be readily apparent.

It should be remembered that one-fourth of the Indian population lives below the poverty line (measured any way you like), one-third cannot sign her or his name and availability of drinking water is a problem for large sections. This is the same section of the people of India that actually goes out and votes and not the section that prefers to stay home, watch television and curse all politicians.

Let us consider some of the economic achievements that the government is crowing about. First, the country's gross domestic product is supposed to grow somewhere around 8 per cent this financial year that ends in March 2004 against a rate of growth of 4.2 per cent in 2002-03.

Even if it is assumed that the fruits of this higher growth rate have percolated down to the masses — about which one is not very sure — a question that would naturally arise is whether this has been due to the government's policies or a direct consequence of the benevolence of the rain gods.

The facts are there for all to see. The expected rise in agricultural production this financial year has to be considered in the context of the massive drop in the index of agricultural production by as much as 12 per cent in the previous year on account of the drought, the worst in at least a decade. About 40 per cent of the total cropped area in the country is still not irrigated and depends on the monsoon.

Foodgrains output alone came down by a huge 14 per cent in 2002-03. This year's good harvest has, not surprisingly, provided a boost to the demand for industrial products. Sustaining the current rate of growth of GDP is not going to be easy, but politicians care little about this; they are more concerned about the short term.

Will the bull-run in the stock market leave a mark on the middle-class investor? Probably not. This is because the main beneficiaries of the recent rise in market indices have been foreign institutional investors. In fact, certain studies have indicated that the number of small investors in the country may actually have declined over the last few years.

When the sensitive index of the Bombay Stock Exchange crossed the 6,000 mark, it reached a level it had touched four years ago! Two million cellular phones were added during a single month last year. The government's advertisements depict smiling folk talking on mobile handsets. Yet, it is also true that not a single telephone has been installed in roughly one out of every six villages all over the country.

Another achievement of the government is supposed to be the record level of foreign currency reserves, which crossed the magic $100-billion mark in the third week of December.

Frankly, for the overwhelming majority of the Indian public, the fact that the country possesses hard currency reserves equal to nearly two years' import requirements is of little or no consequence. Nor is it of much concern to the proverbial person on the street that the country is loaning to (and not borrowing from) the rest of the world (including the International Monetary Fund).

The fact that India has a surplus on the current account or that the rupee is becoming stronger by the day against the once-mighty American dollar would also not impact ordinary voters.

What would, in fact, affect the decisions of the electorate would be certain issues that are often ignored at seminars and discussions that take place inside the rarified portals of apex chambers of commerce and industry associations.

The rate of inflation, as measured by the wholesale price index, has nudged above the six per cent mark for the first time in almost eight months. Yes, the prices of onions — and vegetables and fruits — do matter to most home-makers.

The single biggest failure of the government on the economic front has been its inability to increase employment opportunities. India is the youngest nation in the world and demographers say we will become younger still — the 2001 Census indicated that 40 per cent of the population is in the working age group.

At present, close to 70 per cent of Indians are below the age of 30. Tell the bulk of the country's youth about the Tenth Plan target of creating 10 million new jobs each year and they would probably laugh at you. Official figures indicate that between 1996-97 and 2001-02, 8.8 lakh jobs were lost in the organised sector as a whole whereas almost 19 lakh new jobs were created between 1990-91 and 1995-96.

The organised sector — covering all non-agricultural establishments employing 10 or more individuals and all establishments in the public sector and government — has itself shrunk from 9.6 per cent a decade ago to 8.9 per cent at the end of March 2002.

After the outcome of the elections to the Assemblies of Madhya Pradesh, Rajasthan and Chhattisgarh, there was much talk about the importance of anti-incumbency sentiments and how the expectations of the electorate from their elected representatives have risen by leaps and bounds.

In the last three general elections, between 40 per cent and 50 per cent of the incumbent Members of Parliament were rejected, either by their own parties (by denying them tickets) or by the voters. In other words, each of the last three Lok Sabhas has seen roughly 250 new faces in a House comprising 543 members.

If anti-incumbency sentiments are as strong as they have been in the recent past all over India, these might not exactly translate into good news for the ruling coalition.

(The author is Director, School of Convergence, International Management Institute, New Delhi and a journalist with over 25 years of experience in various media — print, Internet, radio and television. He can be contacted at paranjoy@yahoo.com.)