India Elections 2013/4Issues and Analysisa CM & Promise

By : Amit Bhushan Date : 19th May 2013

One change of flavor for the season of elections this year is that - the analysis of victory or losses at hustling is also being done keeping in mind, the economic factors including the play of corruption/ill fated decisions & their impact; other than the routine caste factors, candidate strengths & weaknesses analysis by the poll pundits of the day. However, the calculation for the economic & corruption related indicators and a candidates (including his electoral machinery) ability to educate public & mobilize opinion on that basis is being totally ignored by political parties while short listing candidates for selection to represent them amongst voters in different constituencies. The reasons is self appointed king makers in various constituencies still are in denial that their actions are causing a surge of opinion amongst masses (in the constituencies where they hold key; while this may be true elsewhere) and want political groups to keep their focus on the caste combinations alone. The king makers belief in the highly fragmentized and divisive polity throwing up winners of their choice is near complete. They are also sure that in the event of loss of their favoured candidates, they will always be in a position to strike a bargain with the winner basis their strength persuasive powers of their backers in such constituencies and thus have little to fear. Indian elections are changing and such beliefs have increasing risks of being marginalized. Some of the major past electoral events, if analyzed from an economic stand point will prove the hypothesis that economic policy analysis is playing out and increasingly important role which the politicians can only ignore to their peril. Some of the events and hypothesis around them is shared below, however the same needs to be further developed and articulated. The important political events may be caused by a litany of reasons other than the economics alone, however the possible economic cause/s are enumerated below. The loss of the principal opposition party in the only southern state is not being covered since this is already well analyzed and documented in commercial media. 1) The loss of the Left wing parties in an Eastern state :- Indian state has happily traded its jobs for trade value with its immediate eastern neighbor for the sake of building strong neighborly relations. The left wing members have remained in support of such policy provided they get social sector benefits such a MGNREGA/food support to cover their exploited working poor. The result was a wiping of Beedi, Garment and light manufacturing industries segment/SME (whatever little were there) from the eastern state into the neighboring country while the social benefits failed to reach the poor on account of leakages. The India state tried to extract trade value by getting to open automobile market in neighbor, while its food market opened up a bit inadvertently (by error rather than by design). However, the job gains were not enough to make up for the job loss to the state. The result is that Left is in no position to come back to power in near future, irrespective of the failures of the current regime some of which can be attributed to old left policies. The industries which have been lost to the neighbor are people intensive and the Left had significant political control but that perhaps didnt yield money but were important from votes perspective. The Left could take suitable decisions for the large swathe of

workers at opportune time near elections and this fact was ignored in favour of social benefits, which simply failed to reach the targeted beneficiary to yield enough votes. The agitation friendly state has already driven out much of the organized sector and is looking to become new BIMARU in India. 2) The loss of the Left wing parties in a Southern state: - If in east, the loss was due to combination of central and state policies, the loss in south was a self inflicted exercise. The Southern state in its quest for growth started with promoting IT to create Jobs for its well educated youth. While the exercise met limited success, somehow the states politicians manage to discover that such industry somehow grow robustly well provided they are surrounded by Malls and Multiplexes. So, the state politicians and their kin in the quench to develop the necessary infrastructure drafted & re-interpreted policies for such Malls and Multiplexes to come up and these malls fetched better returns than investment in Educational institutions (a sector where the state showed huge promise tough much of the machinery and control was with government). The neglect of education and health sectors for the sake of Commercial sector & commercial interests, including real estate possibly back fired. To further intensify the gravity was neglect of the plantation sector which lost competitiveness to imports from other countries such as spices imports from ASEAN and coconut imports from Sri Lanka under treaties to enhance Indias strategic interests in these regions which was thoroughly neglected by the Left which supported the Center to its peril while it felt that by pushing MNREGA, it is already doing enough to protect the plantation workers. 3) The repeat winners in states: - Most repeat winners are from the Principal opposition or regimes opposed to current central government. The common feature of these opposition ruled states is that they have delivered upon the Central programs such as: a. Highways and Rural roads relatively well compared to those states which saw toppling of opposition rule (Himachal). b. Better Justice Delivery mechanism with some marked improvements of law and order such as in case of Gujarat (barring riots of yesteryears) and Bihar. c. Some novel programs and schemes which attracted public attention such as on girl child in MP or Food distribution in Chhattisgarh. d. Creating a suitable perception for being industry friendly through announcing of industrial policies & subsidies and managing the corruption perception of state, relatively better than others. The state resources in almost all states are up for Sale as is the case with the Center. The wat er resources are up to exploited in Himachal and Uttrakhand, minerals in Jharkhand/Chhattisgarh /Rajasthan and elsewhere. The politicians in India believe that it is not a balanced & equitable policy which yields investment (since a fair competition deteriorates returns on investments) to states but a perception that investor is being delivered special privileges will get this development much faster. Since the saga for special privileges is not only strong but also beneficial to the politicians privately, they tend to create a bureaucratic web & tactics to allow manipulations. This seems to be the win-win mantra for politicians from bottom to the very top at all levels of government in India.

In all this mayhem, a particular CM has outshined other CMs and has managed to establish a candidature amongst various Central leaders active for decades in Central government politics with popularity soaring beyond limits of his own state as perceived by commercial media. While poll pundits are busy attributing this to a variety of reasons, the economic reasons are rather simple to decipher. The state government has done relatively well in getting jobs for rural youth by attracting manufacturing and thus delivering upon the rural youths ultimate dream - of migrating to city with a permanent job, a motorcycle and a two room dwelling. It is another matter whether this was a planned outcome of the industrial welfare as per state policy or an unanticipated result. The other promise that has been delivered is of agricultural irrigation via canal & motorized pumps or watershed management which played its part along with GM seed technology. The state could thus improve the lives of rural farmers & workers delivering improved life and even improve land prices due to increased demand from industry and households. This yielded the rural votes bolstered a farmer friendly image. The politicians of the state are currently sized with the issue of encashing this unprecedented opportunity. The Principal opposition party is in a bind as it does not know with what policies and program to approach people. Its internal wrangling related to the Face of elections is also yet to be settled. It is yet to figure out the skeletons in its cupboard and their reaction to the formalized plan whenever such a plan sees the light of the day. The political pundits in the opposition ranks know that when its plan is announced, the competing parties will seize opportunities to bring out contradictions and highlight weaknesses to the voters which are many. Continuance of the delay leads to a relatively lesser groomed voter taking decision which could be of greater benefit to the smaller rivals rather than the principal opposition. Delaying elections and waiting for the opportune time is its mantra even as it continues to rely on media and smaller parties to educate voters and continues to hope that it will benefit without any efforts if the face of risks to its loyal rank and file. The record of the principal opposition is tainted with its own problems related to resources distribution by state governments under its rule. The loss of Uttrakhand, Himachal and Karnataka are shining examples. Its trade treaties with Thailand have only resulted in losses of jobs in electronic assembly sector while gains to the automobile and component sector have not been commensurate and the strategic gains for India in ASEAN is unquantifiable at best. While it promises to deliver upon manufacturing sector, its policies are little understood by public or the industry. Manufacturing in India has 3 principle problems which is the unruly labour, lack of competitively priced power and consistent supply or raw materials (due to policy uncertainty), clearly stated requirement and quantifiable demand at specific price points (due to policy uncertainties center and states and governance issues). The principal opposition has failed to elicit its programs to support domestic manufacturing for any industry segment say defence sector for example. Its show of good governance at state level does not automatically catapult it to govern at the center and give confidence to people to vote for it.

The great economists working full time or on adhoc basis for the government have not discussed their thoughts on immediate bread and butter issues of the people but speak at length on various dreams to be realized in the long term (when we are all dead). Like, not one economist have spoken on Indian government and some states subsidizing Foreign manufactures for people from humble Tablets for students to Mixers/Grinders, Television and Laptops even as the domestic manufacturers struggle and workers remain unemployed. Even where the goods are labeled made in India most components are of foreign origin as domestic manufacturers cannot compete with those abroad. Instead of looking at the issues and solving these with the state resources, it is used to subsidize foreign manufacturers to sell heir widgets to India which are not selling abroad due to recession. We have years of experience in subsidizing imports from Fuels like diesel/kerosene to fertilizers in order to help people. Our politicians & bureaucrats seem to religiously belief that instead of subsidizing fertilizers, if our farmers are subsidized per Kilo of produce then some crime is waiting to happen although reasons remain unsubstantiated. Cash subsidy to people for purchase of fuel is a recently touted phenomenon and yet to see light of the day. It is also a concern that this flagship scheme of the current dispensation has seen very limited success while its ill fated coal block distribution and bandwidth distribution were total success; so it begs a question that what he dispensation should redefine what schemes were flagship programs. The roll-out of such programs to education/healthcare, where such schemes can be huge values add, are yet to be flagged off. It is important the politicians understand the economic context for elections and prepare for response to public rather than behaving like ostrich with head in sand.