With the last budget of the Narendra Modi-led National Democratic Alliance government filled with schemes and tax breaks that are seen as election sops, here’s a question: does the economy matter to voters?
It would certainly seem to be the case. In December 2013, ahead of the 2014 Lok Sabha elections, the Lok Foundation and Oxford University, as part of a series of large-size nationally representative sample surveys administered by the Centre for Monitoring Indian Economy, asked respondents to identify the top issue that would influence their voting choice.
Across age groups, ‘overall economic growth’ was the top issue, while rising prices was the third, with corruption coming second.
The overall economic growth of the country mattered most of all to the poorest, even more than changes in their personal family income.
In a post-poll survey done by Centre for the Study of Developing Societies-Lokniti in 2014, nearly one in every five people said that rising prices was the most important issue for them.
This primacy of economic growth in a voting context was not always the norm in India. In 2014, a new coalition of economic conservatives took shape, expanding the Bharatiya Janata Party’s usual voter base of social conservatives, political scientists Pradeep Chhibber and Rahul Verma argue in their book “Ideology and Identity: The Changing Party Systems of India”. These economic conservatives believed that the Congress-led United Progressive Alliance government was spending too much on subsidies and taking away too much through corruption.
The size and commitment of this coalition were unprecedented. “While it is true that the economic right has also supported the BJP in previous elections, the analysis of NES [National Election Studies] time series data suggest that there is a sharper distinction among voters on economic issues than ever before, and that more voters leaned rightward on economic issues in 2014 than in previous years,” they write in the book.
So was 2014 then about voters punishing the UPA for its perceived poor economic performance? The answer would depend on what voters believe is “poor economic performance”.
In a Lok Survey conducted in April 2014, a large majority (between 60-70%) in each age group believed that their children’s standard of living would be better off than their own. Over 60% believed that the country was progressing, and roughly the same share had confidence in the central government, even among younger people. A majority (between 55 and 60%) in each age group believed that the economic conditions in the country as a whole were getting better. A similar majority believed that their own household’s economic condition was getting better.
Even in November 2014, after the BJP won a bruising campaign based on what was believed to be its success in painting the UPA, especially its second term, as failing at economic growth, a majority said that compared to five years before, their economic condition was now better.
Perception of a failing economy seems to have mattered more than voters’ personal incomes.
The evidence on whether voters reward economic growth in India is mixed and varies greatly depending on the level of election looked at and the time period. Political scientists Milan Vaishnav and Reedy Swanson found that in contrast to the 1980s and 1990s, there were significant electoral returns to higher growth in the 2000s.
“Statistical analyses, after controlling for a range of factors, reveal that a 1 percentage point improvement in a state’s growth rate in the 2000s is linked to a greater than 9 percent increase in the likelihood that the incumbent will be reelected, a 4 percentage point gain in seat share, and a 1.3 percentage point rise in vote share. These effects are unique to the most recent decade, as growth failed to deliver positive electoral returns in either the 1980s or 1990s,” they write.
Economists Poonam Gupta and Arvind Panagariya looked at 422 candidates in the 2009 parliamentary elections and found evidence of the positive effect of growth on the prospects of the candidates of the state incumbent parties to win elections. An analysis in Mint in 2014, however, did not find evidence that voters were punishing those who performed poorly on economic growth.
None of these analyses directly asked voters their views. In the end, the possibility is high that perception is what matters more than actual economic data. Voters appear to conflate their feelings about an administration or its leader with actual economic growth.
Asked on the eve of every budget of his term so far whether Modi has been successful in reducing inflation, respondents to a nationally representative survey conducted by CVoter agreed in the government’s early years, but then swung towards saying prices were shooting up.
This, despite the fact that as the journalist Roshan Kishore points out in the Hindustan Times, inflation has steadily fallen since Modi took office, largely on account of low crude oil prices.
One possibility is that with sectors of the economy where most people work, like agriculture and construction, not growing fast or delivering better incomes, people are feeling the squeeze even if prices are not rising.
In the CVoter survey, respondents said as much – from more people initially saying their incomes had remained the same but their expenditure had gone up, the scales now tilted towards those who said that their incomes had gone down and their expenditure had gone up.
How much of this sticks to, and is seen as a fault of, this government and Modi in particular, given his still substantial individual popularity, is hard to judge. The pessimism of UPA-2 appears not to have returned yet. In the CVoter survey, more respondents feel that the economy under Modi and ailing former Finance Minister Arun Jaitley is doing better than expected than those with negative ratings, while the reverse was true under UPA-2.
If the battle is of perception, the Modi government’s focus might centre around one area – jobs. Objectively, the numbers are bad, as the suppressed National Sample Survey Office report leaked by Business Standard journalist Somesh Jha shows. Voters systematically say in a range of surveys that unemployment is the biggest issue they are facing. Whether Modi is able to spin it effectively could determine the outcome in 2019.
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