March 17, 2017 4:00 pm JST
Chaitanya Kalbag

Will Modi put his money where his mouth is?

Populist promises helped BJP's poll success, but reforms could be costly

Indian Prime Minister Narendra Modi waves as he arrives at the Bharatiya Janata Party headquarters in New Delhi on March 12, a day after the party’s landslide victories in key state legislature elections. © AP

NEW DELHI -- Indian Prime Minister Narendra Modi won thundering approval for his bold, risk-taking style of governance with his landslide March 11 victory in recent elections in Uttar Pradesh, India's most populous state, where his Bharatiya Janata Party gained nearly four-fifths of the legislature's seats.

It has taken Modi fewer than three years in power in New Delhi to re-invent politics in India. Back in 2002, he was pilloried for turning a blind eye to sectarian riots in his native Gujarat, when he was the state's chief minister. The one-time provincial chief minister and former foot soldier of the BJP's parent, the Hindu nationalist Rashtriya Swayamsevak Sangh, Modi has emerged as the country's most charismatic and powerful political leader in half a century.

The critical question is: Will he use this mandate to cement a reformist legacy, or will he hew to a more populist path that will guarantee him a second term in the 2019 general elections but will not deliver the double-digit growth India needs to catapult it from poverty?

Modi told a rapturous crowd of BJP workers in New Delhi after the victory that elections were important, but that he had set his sights on 2022, the 75th anniversary of India's independence. The next five years, he said, would be the platform for a countrywide push on development of a "New India" movement.

Mid-term litmus test

Elections in Uttar Pradesh and four other states had been billed as a mid-term test for Modi and a referendum on his shock November decision to demonetize high-denomination banknotes, a move that sucked 86% of cash out of circulation in 50 chaotic days marked by long queues at banks and ATMs and disruptions to millions of small businesses accustomed to dealing in hard currency.

At the same time, the election results were a resounding vote of confidence for Modi, who portrayed the banknote ban as a blow in favor of the poor and against black money, corruption and terrorism funding. Government ministers have noted that millions of Indians suffered weeks of inconvenience, but bore it stoically because they believed Modi would deliver a better future. There were no mass protests staged in the country.

The Uttar Pradesh victory seemed to signal the shattering of decades of vote-bank politics -- those based on caste and religion. The BJP won support across the board among the 138.5 million voters in the north Indian state. The ruling Samajwadi Party was wiped out in its bastions previously defined by low-caste and Muslim votes. The SP plunged to 47 seats in the 403-seat Uttar Pradesh Assembly from 224 in the 2012 elections; its share of the vote fell to 21.8% from 29.13%. The BJP won a staggering 312 seats from 47 in 2012; its vote-share rocketed to 39.7% from 15%. The Bahujan Samaj Party, once a champion of the Dalit, or "untouchable" caste, was reduced to 19 seats from 80, while the Congress party, which ruled India for a decade until Modi's ascent and struck an ill-fated alliance with the SP in Uttar Pradesh, managed only a humiliating seven seats.

Congress won a key consolation prize in the northern farming state of Punjab, where it unseated an alliance of the BJP and the Sikh party, the Shiromani Akali Dal.

Shocked opposition politicians led by BSP chief Kumari Mayawati have alleged that the electronic voting machines used in the election were tampered with, but the Election Commission, which set up the 147,148 voting booths across Uttar Pradesh, has rejected the charges. Several countries have banned EVMs and even the BJP had protested their use after the Congress party won a second term in the 2009 national elections.

Key state

Uttar Pradesh is a political lynchpin: it sends the maximum number of representatives (80) to parliament's lower house. It was home to nine of India's 15 prime ministers. Modi, who forsook his own western state of Gujarat to win a parliamentary seat from Uttar Pradesh's Hindu holy city of Varanasi in 2014, said political pundits who had predicted defeat for the BJP would have to eat their words. A voter turnout of 60%, the highest in 24 years, greased the wheels of the party's steamroller. It was one thing to win elections on emotional issues, Modi noted, but tougher still to win on a development platform.

Modi is finding it hard to keep his 2014 promise of "less government, more governance." The BJP came in a clear second to Congress in two of the smaller states, Goa and Manipur, which also elections were held, but has formed governments in both, with the help of smaller parties and defectors. Both states have governors, the constitutional heads, who were appointed by Modi. The prime minister, who has lost no opportunity to criticize Congress for using governors to unseat unfriendly state governments and manipulate majorities through defections, is now being accused of double standards. In the coastal state of Goa in particular, the BJP's chief minister even lost his seat; that post has now been filled by Manohar Parrikar, who was heading the state until November 2014 when he was chosen by the prime minister to head up defense.

Parrikar was clearly a misfit in the rough-and-tumble politics of New Delhi in his 28 months in the capital. The defense portfolio is now temporarily back with overworked Finance Minister Arun Jaitley -- the second time he has been put in charge of the key department, having run it for six months after Modi took office in May 2014. A volatile cease-fire line with nuclear-armed neighbor Pakistan, persistent terrorist attacks in Indian-ruled Kashmir and tensions with China make it vital to have a steady hand in the defense ministry. Whoever Modi eventually names as Parrikar's replacement, his cabinet will still have 79 members, as many as the Congress party's bloated administration.

Ever the showman, Modi insisted after the Uttar Pradesh victory that he had kept his promises. "This is a prime minister who is asked 'Why do you work so hard? Why do you strive so hard?'" he said, adding: "What greater good fortune can there be than this in one's life?"

Focus on the poor

Modi said his vision of a New India rested on the dreams of 65% of the population who are below the age of 35. It was a transformational moment, he said, where the poor, instead of asking for more dole handouts, looked at what they could do to lift themselves from poverty. "The poor are saying, 'Give me the opportunity, I will do the hard work'."

Despite such rhetoric, the prime minister has promised to write off loans to distressed Uttar Pradesh farmers, estimated by some analysts to total about 85 billion rupees ($1.25 billion). Bankers are wary of such largesse and the head of the country's largest lender, the State Bank of India, said on March 15 that write-offs would disrupt credit discipline. Ironically, India's comptroller and auditor general has said that a nationwide write-off of farm loans totalling 520 billion rupees in 2008 by the Congress-led government was riddled with corruption and badly implemented. Suicides by heavily indebted farmers have been rising across India: the National Crime Records Bureau said 8,007 farmers killed themselves in 2015 nationwide, up sharply from 5,650 in 2014.

Striking a statesman-like note after a brutal month-long campaign during which he spoke at 24 rallies, Modi warned his party that some compromises could lie ahead. "When the banyan tree of the BJP is heavy with the fruits of victory, it behoves us to bend more than anybody else."

The rewards for Uttar Pradesh's voters from a grateful BJP government could include a sharp rise in rural electrification and free cooking-gas connections to the poorest households. On Wednesday, Modi's cabinet approved a 214 billion rupee project to widen to six lanes a 73km stretch of highway connecting the prime minister's constituency to the town of Handia.

Economists are still grappling with counter-intuitive data on the after-effects of demonetization. The government's statistics office said on Feb. 28 that gross domestic product grew by an annual 7% in the September-December 2016 quarter, contrary to widespread anecdotal evidence of a nationwide slowdown. For the full 2016-17 year ending March 31, it said GDP is seen growing at 7.1% compared with 7.9% in 2015-16. The International Monetary Fund had forecast GDP growth would fall to 6.6% this fiscal year.

It remains to be seen whether any new government can dent the poverty in Uttar Pradesh. According to estimates in February by the government's Economic Survey, between 2001 and 2011 the state accounted for 5.83 out of 11.2 million migrants within India. At least 39 of Uttar Pradesh's 75 districts are major workforce exporters -- a stark reflection of low incomes and poor economic opportunities.

Chaitanya Kalbag, a former Reuters Asia editor, was editor-in-chief of the Hindustan Times.

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