Delivering on the Victory in India’s 2019 General Election
Mr. Modi has secured a historic victory and has the chance to steer India in one of the most important phases, which has the potential to take hundreds of millions out of poverty and place India on the stage of world power. The ‘world’s largest exercise in democracy’, the Indian general election, concluded earlier this month with over 600m votes cast across seven phases of polling, spread over a period of five weeks, with more than 67% of India’s voting population turning out to express their preference. While Prime Minister Modi’s approval ratings have remained high over the last five years, the vast majority of opinion polls leading up to the general election seemed to indicate that the National Democratic Alliance (“NDA”), led by Mr. Modi’s Bhartiya Janata Party (“BJP”) would fall just short of a majority. However, the election results, announced on May 23rd, have proven this opinion polling data to be significantly off the mark. In a repeat of the 2014 general election result, the NDA was voted back into office with a significant majority, winning 352 out of a total 541 parliamentary seats in the Lok Sabha (India’s lower house of parliament), and with the BJP itself winning 303 seats directly, 21 more than in 2014. Mr. Modi has now been presented with a once-in-a-generation opportunity to transform the country by building on the successes of his first term (“NDA I”) in office and finishing the job on the pending policy priorities from the past five years and prioritising the most critical new issues that have arisen in the intervening period since the last election. He also has the window to prove he is all about development and put to rest the questions raised on nationalism, divisiveness and religious discrimination. This month’s Sign of the Times, in addition to briefly analysing the results of the 2019 general election, seeks to outline a policy mandate for the next five years that will enable the new government (NDA II) to take India to a US$5tn economy and make the significant step in the phase of India’s ‘Rise to Significance’.
2019 General Elections: Revised Political Landscape
The 2019 general election result turns the political phenomenon of 2014 into a trend, with the BJP and its allies winning outright mandates by securing parliamentary seats in states that had historically been dominated by either the Indian National Congress (“INC”) and its allies (together, the “UPA”), or regional political parties. In the build-up to the recently concluded election, India’s voters highlighted unemployment, development, poverty, inflation and corruption as the five most pressing issues facing the country. In light of the election results, and despite a concerted attempt by the INC to point towards some of the shortcomings of NDA I, an increased majority of the Indian electorate were convinced that Mr. Modi and his allies were best placed to tackle these issues, notwithstanding that there was much that could be called “dirty” politics in both campaigns alongside other factors, such as security, that no doubt played an important role too. Based on the election results, India’s parliamentary composition is as follows:
It is important to note that while the NDA alliance’s total number of seats has remained unchanged in the recent elections) in the diagram above, the number of seats taken directly by Mr Modi’s BJP party within this block has increased from 282 to 303, further building out the absolute majority that Mr Modi has enjoyed during the past five years and strengthening the parties position relative to its NDA allies, providing the next government with increased room to legislate and manoeuvre during the next five years.
2019 General Elections: Key Takeaways
While the NDA’s victory in 2014 was primarily driven by a strong anti-establishment sentiment and optimism over Mr. Modi’s development-focused first term, the 2019 general election result was underpinned by a wider set of electoral trends that have the potential to rewrite India’s political landscape, at least for the foreseeable future. These factors include:
- The NDA’s Dominance of the “Hindi Heartland” Continues. As was the case in 2014, the NDA’s victory in these elections was underpinned by its dominance of the “Hindi Heartland” states of Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Chhattisgarh and Jharkhand. Despite suffering electoral defeats in recently concluded state assembly elections in three of these states (Madhya Pradesh, Rajasthan and Chhattisgarh) just a few months earlier, the NDA won 177 parliamentary seats (out of a possible 198) in the general election. To put this result into further context, the number of seats won by the NDA in these six states is almost twice the number of seats won by the UPA across all of India.
- The NDA Margin of Victory Boosted by Inroads into Key “Free Radical” or Regionally Focused States. The NDA also made significant gains in the states of Odisha and West Bengal – two states that have historically been dominated by “regional parties. Across these states, the NDA won 26 parliamentary seats out of 63 seats – a 23 seat improvement over the 2014 – and this helped boost its overall margin of victory. More importantly, these gains could represent a longer-term shift in electoral trends away from regional political parties and provide the NDA with a solid platform upon which it can look to build its electoral presence in both states.
- A Shift in Electoral Mindset Towards “Presidential-style” Voting. Despite India’s parliamentary electoral system, it would appear as though the country’s electorate is increasingly inclined to vote for the top of the ticket during general elections. This trend, identified by exit polling data, revealed that the choice of Prime Ministerial candidate was the most important factor for polled voters and subsequently further underlined by divergence in central and state election results in the state of Odisha, both of which were conducted in parallel; while the BJP won only c.16% of Odisha’s total legislative assembly (state election) seats, its share of the state’s total parliamentary seats (national election) was significantly higher, at 40%.
- Major Overhaul Required in the Indian National Congress (“INC”). For the Rahul Gandhi-led INC, this latest election result represents yet another significant electoral setback for India’s oldest political party. While the UPA increased its overall seat count by 31 seats (vs. 2014), the INC alone won just 52 seats, which represents a marginal improvement (8 seats) over its historically poor performance in 2014. With the benefit of hindsight the INC’s recent victories in state legislative assembly elections in Madhya Pradesh, Rajasthan and Chhattisgarh appear to have been anomalies rather than the start of a nationwide rally in their favour, and it would appear that a more fundamental overhaul of the INC’s leadership and platform may be required in order to reverse current public perceptions and the growing and strength of defeats this election reveals.
- Regional Political Parties Need to Think Beyond Traditional Vote Banks. As highlighted both above and in last month’s Sign of the Times, India’s electorate is becoming younger, more urban, wealthier, more educated, more connected and more financially literate; as such these underlying drivers of India’s economic development are more important than traditional factors like caste and religion, and these are likely to grow in importance to the country’s voters in future elections. Regional political parties, which have benefitted from the traditional factors in the past, formed alliances that were designed to consolidate the share of caste and religion-based voters as the core plank of their strategy for the 2019 election and have been punished for doing so. They have a transformation to make if they wish to remain relevant going forward.
- Highest Voter Turnout in India’s History. With more than 67% of India’s voting population participating in the 2019 general election (which translates to a staggering 600m votes), voter turnout in the recently concluded elections was the highest in the country’s history. At a time when global voter turnout levels have been declining – voter turnout in national elections has decreased by an average of 10% globally over the last 25 years – the growing participation in India’s general elections is a welcome development for democracy in general. As the world’s largest democracy with the world’s fastest growing economy, it is fitting that India should reinforce the strength of democracy and in particular, the peaceful development of society, to the rest of the world.
Key Priorities for the NDA II – Status Check on Progress to Date
Having secured comfortable electoral victories in successive general elections, the NDA will undoubtedly be operating from a position of strength for the next five years. In a manner similar to 2014 and 2015, it will also look to build on its electoral success at the national level to score decisive victories in upcoming state legislative assembly elections, particularly in large states like Maharashtra, Bihar, Haryana and Jharkhand. However, beyond securing its political base, the NDA has the opportunity to truly transform the country across economic, social and national security lines. It will also have the opportunity to exercise its influence in regional and global political affairs. With a long list of areas that need to be addressed and many vested interests to satisfy, crafting a focused policy roadmap for the next five years will not be easy, and the BJP will need to complete the work it set out to accomplish five years ago, building on successes, completing leftover priorities and tackling new emerging issues that will determine India’s future development. In the build-up to the 2014 general election, the Sign of the Times outlined an ambitious policy agenda for the new government, that, if executed effectively, had the potential to put India on the path of raising annual GDP growth to 12% per annum. This agenda remains a useful starting point for charting the country’s progress and the below provides a summary of what has been accomplished and what remains to be done from this original list.
The analysis of the NDA I’s performance against the policy agenda identified in 2014 is not intended to be presented as a scorecard of its performance. It is important to note that Mr. Modi’s government achieved substantive success across a number of other important policy areas (see inset). These are worth enumerating, both because they provide further context around the government’s priorities and because they provide a platform for the NDA II to build on as it formulates its agenda for the next five years.
Strategic Macro Context for Policy Formulation
Stepping back, as highlighted by the previous two in this series, India’s growth during the next five years sits within a broader context, both of India’s own long-term growth trajectory and the changing geo-economic and strategic environment. India today is at the cusp of its rise in global significance, having passed through a number of different growth and development phases since independence in 1947, as articulated in previous research, if policy is to rise above just initiatives, policy makes needs to recognise the fundamental nature of where India is to be coherent and effective.
To recap, India’s journey is as follows:
- Phase I: Hardship and Poverty (1947-2006), which correspond roughly to the long and often flat journey of India’s GDP to $1bn, marked by hardship and poverty;
- Phase II: Economic Liberalisation and Participation (2007-2018), from the inflection point and rise that has taken it to c.$3bn, marked by increasing economic liberalisation and participation, and now;
- Phase III: Rise to Global Significance (2019+), which marks India’s rise to global significance alongside the continued growth that will bring GDP to US$5tn by the time of the next election, and to c.$8tn within the next decade.
Each of these phases has been marked with different characteristics in terms of economic challenges, opportunities, drivers and inhibitors, within the longer-term trends of liberalisation, integration, and participation driving development. Further, each of these phases have witnessed turning points that mark the transition from one phase to the next, in the form of events that have led to step changes in GDP growth.
The recently concluded general election represents such as a turning point potentially: With Mr Modi having further built out the parliamentary majority won in 2014 he has clearly secured the electoral validation of his first term in office as well as an strengthened mandate to deliver on his campaign promises of economic prosperity and a rising India into the next decade.
In steering the country into Phase III, policy makers will need to be driven by a set of insights which drive the policy philosophy and agenda. Although India’s government must chart a new course – the rise of the biggest democracy to ascend in human history – there are clear lessons that can light the way ahead, those include the following:
- China’s Precedent Provides Important Lessons. India’s development phases closely follow those undergone by China, a country that India is trailing by approximately ten years in terms of development, China having crossed the US$3tn GDP mark in 2006. That year was the departure point of an economic boom that led to China’s GDP expanding to US$8tn in less than a decade, despite the macro-economic shocks of the global financial crisis. India’s economy is similarly poised today and is also due to scale to US$8tn within a decade, and its leaders should look at China’s own policy priorities of the past decade to chart the country’s path in terms of economic policy, trade and investment and broader international relations.
- India’s Rise Will be Different, and a Democracy Can be a Huge Advantage. The domestic and global context of India’s development in the coming decade of course will be very different from the one that China’s was operating under. Politically, India and China exercise very different levels of control over their respective economies, but Mr Modi, during NDA I, demonstrated that in the space of only five years, it is possible to push through reforms at a scale and scope nearly unprecedented for complex democracies: mass financial inclusion, demonetisation, unification of state taxes, bankruptcy law and a nationwide critical healthcare scheme.
- The Global Context is Changing, and the Liberal World Order is No Longer Seeking to Provide Benevolent Parenting. India’s rise is occurring at a time in which the western liberal order that has governed the world for decades is clearly under attack, and populism, trade wars and protectionism are disrupting national economic, political and security strategies across the world.
- A Comprehensive Security Framework Will be Required for Bold Initiatives. Alongside its priorities in domestic economic development, India’s government will need to formulate a proper series of geopolitical actions to enable and secure its development and position India well in its rise in global significance. The key initiatives may well include: negotiating peace with Pakistan; becoming a pragmatic ally of the US, while clearly recognising areas such as trade where its interests may well diverge from its partner; increasing its participation in international bodies such as the UN, WTO and others to build international credibility; and assuming the role of a superregional power player in Asia while managing its increasingly complex relationship with China.
- India’s Rise Should Target Placing it Among the Trialogue that will Shape the 21st Century. India is set to emerge as one of the three nations shaping the course of the 21st century alongside the United States and China, introducing multi-polarity in what would otherwise be a bipolar world order. India will need to ensure constructive relationships with both countries to ensure its seat at the table in addressing the world’s major issues going forward. With both the US and China significantly more powerful than India for the foreseeable future, India will need to facilitate, mediate and serve as a balance between the two superpowers.
- Embrace Fully the Development of the First Scaled Information Age Nation. China was the last of the scaled economies to become an Industrial Age economy. India can be the first Information Age one. The disruptive impact of technology is being felt on the western economies and societies in a series of national and regional voting upsets, Trump, Brexit, EU elections have all shown the pain of industrial age economics and politics. While technology undoubtedly poses risks, as seen by social media’s harmful impact on democracy by propagating fake news and divisiveness, it of course continues to transform the opportunities for rising economies like India to leapfrog the old models of banking, healthcare, education and inclusion of every type.
- No Government Can Make India Rise; The System and the Platform Has to be Right. A government cannot force a country of 1.3 billion rising to 1.6 billion to a nirvana of prosperity. To imagine it can control that outcome would be the height of egotistical folly. However, it can create a system and a platform that transforms the nation. This subtle difference will make the biggest difference to the pace of India’s development. For such a system to succeed it would need to enable, and benefit from, radical openness: opening the people to unlock human potential, open, meritocratic and transparent government, open access to resources securing growth, and openness to entrepreneurship to drive innovation and productivity. Such a system would enable India to become a global platform and so, an engine of demand and supply.
If India’s growth plan is to be more than an amalgam of initiatives, it will need to be steered in the light of these lessons with a philosophy and a framework into which the initiatives can sit. The blueprint agenda that emerges for India’s next phase will need to recognise all of these realities.
A New Policy Agenda for a New Era
Against this backdrop, Mr Modi will need to formulate a policy agenda providing a roadmap for the country’s development over the next five years and beyond, balancing the various economic, social, security and geostrategic priorities to deliver on the promises made to the electorate. Given the context laid out above five key priorities stand out around which the New Policy Agenda for India’s government will need to be formed:
- Eliminating Blockages: Opening India to the World. Many of Mr Modi’s promises leading up to his first term in office were around cutting through the corruption, bureaucracy, political paralysis and the inertia that was holding India back, and the performance barometer laid out above demonstrates that that these actions were indeed a priority for the NDA I government. And while much has been accomplished during the past five years, much remains to be done in opening India to the world, overhauling regulatory systems and the labour market, upgrading financial markets and driving private sector economic participation to integrate India more seamlessly into the global economy.
- Catalysing India’s Macro-Growth Drivers. While ongoing priorities of the past five years will continue to be critical, ensuring that India captures the full value of its unique macro-growth drivers, namely demographics, urbanisation, technology adoption, mass consumption and mass financial inclusion, is equally important. While these drivers at their core have largely unfolded irrespective of specific government policies, driven by factors outside their control, the NDA II government will need to act strategically to ensure that India reaps the full benefit of these drivers in the economic sense.
- Mass Inclusion: Maximizing Economic Participation. Of the five drivers above, mass financial inclusion arguably has the most significant near-term potential: India already has the world’s largest young population, the world second largest urban population and a number of smartphone users and a rapidly growing consumption base. While these factors will continue to underpin India’s long-term growth, unlocking the potential of this base today through greater economic inclusion promises to provide India with the biggest gains over the next five years. Building on the success of financial inclusion initiatives kicked off during his first term Mr Modi will need to further integrate the hundreds of millions of citizens that have traditionally been outside of India’s formal economy.
- Security and Defense. As stated above, bold policy moves will require not only domestic alignment but also national security framework providing a stable environment in which investment, entrepreneurship and development can flourish. Issues like a stable equilibrium, or even a lasting peace, with Pakistan and the protection of the homeland from terrorism will need to be at the top of Mr Modi’s list in this regard, but other issues like securing sea lanes for free trade in the Indian Ocean and cybersecurity will also play an important role in this regard.
- Geopolitical Positioning. India’s actions will not occur in a vacuum and will almost certainly prompt reaction from other major global economies, particularly China but also the US and other more regional powers. As such, India’s policy agenda needs to include a roadmap for India building global influence and positioning. At a minimum this will be required for India to create trade linkages and the capital flows to enable further growth, as well as the access to the natural resources required to fuel its development while balancing competing priorities around environmental protections and climate change.
The specific policies within these five priority areas of the government’s agenda will of course include the continuation (and completion of the work kicked off by the NDA I government, as well as additional policies around issues that have arisen given India’s transformation and the changing global context over the last five years.
The Policy Agenda for India’s New Government
The agenda outlined above represents a view of the most impactful set of policy priorities that the NDA II could look to implement over the next five years. Of course, formulating a policy agenda is one thing, and detailing and implementing it in the realities of Indian politics is another thing entirely. There are a number of important execution considerations, including the judicious utilisation of political capital, state vs. national considerations and the almost certain emergence of short-term economic, geopolitical and national security related distractions. Mr. Modi and his government will need to manage these potential issues, while at the same time not losing sight of the policy priorities that put India on the path to becoming truly wide open.
With India set to hit US$5tn in GDP by the next election (barring an unforeseen catastrophe) and emerging as a global power, history already clearly belongs to Mr Modi as the prime minister who will preside over the country at this time.
With a refreshed and strengthened mandate, Mr Modi has a historic opportunity to unite the country and reaffirm his commitment to the ‘soft priorities’ that are harder to quantify than economic development targets, but perhaps more important for India as the world’s largest democracy, unlocking the potential of all Indians requires promoting shared values, preaching tolerance, prioritising personal safety for all Indian regardless of caste or creed, supporting minorities, free speech and the press, and ensuring impartial policing and justice. All of these factors are critical to India’s continuing functioning as a democracy, who’s fundamental vibrancy was demonstrated by the high levels of voter turnout in the election just passed. India’s leaders not only need to create liveable conditions for all of the country’s 1.3bn citizens, they also need to create a country fundamentally worth living in for them all.
India’s democracy has demonstrated the country’s desire for growth and development, and the government will need to draw on the strength of this democracy to deliver on its promises. However, the lesson from around the world is that when leaders fails to deliver, democracy can turn from an asset into a potential liability, acting as a blockage on governances, effective action and tending towards self-harm. The political deadlocks in the UK following Brexit and the disintegration of relationships between the legislative and executive branch in the US under President Trump are examples of democratic processes leading to stalemates and regression. They have made the Chinese and autocracies world over question the merits of democracy in times of rapid and systemic change. Importantly, in both cases these processes were enabled not just by unfulfilled promises but also by the fundamental divisions that enabled the body politic to express their anger and frustration (in both cases enabled by social media).
Against the disruptive backdrop that is witnessing the tensions within the existing world order, particularly in the West, uniting the country should be a priority for Mr Modi both on a principles and pragmatic basis, given the unforeseen disruptions that could throw India off course during the next five years and create popular discontent that risks undoing the accomplishments achieved to date. Indeed, at India’s stage, unity is a pre-requisite for the journey ahead.
India’s 2019 General Elections| Reforms | Growth| Transformation| South Asia | India Superpower