Guest Post: Interpreting The Indian Election

This guest post was contributed by Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics.  He notes two surprises in the outcome of India’s recently concluded election and suggests that India offers an alternative model of development for much of the world.

The results from the Indian elections point to a victory for the incumbent Congress party and its allies.  Congress was led de jure by the economist-turned-politician Dr. Manmohan Singh and de facto by the Italian-born Sonia Gandhi, who is part of the Nehru family, which has been a force in Indian politics since the late 1800s and provided three Prime Ministers.

Two casualties of the election have been the Communists who resisted economic policy reform and opposed the nuclear agreement between India and the United States, and the Hindu nationalist party, the BJP.

Going forward, these results augur well for Indian economic policy reform. The Congress will be numerically strong enough not to have to rely on partners for political support and will be able to push through new policy initiatives.

Another likely consequence is that the Nehru family will probably provide India, not immediately but within the next couple of years, with its fourth Prime Minister—Rahul Gandhi, son of Rajiv Gandhi, grandson of Indira Gandhi, and great grandson of India’s first Prime Minister Jawaharlal Nehru. 

These results are surprising for two reasons.  Indian elections have traditionally been characterized by the phenomenon of anti-incumbency: ruling politicians get routinely thrown out of power.  This government is the first in over 40 years that has been re-elected after a full term in office.

The second reason for surprise is that anti-incumbency has been defied at a time of global economic crisis.  While India was affected by the crisis, it has been less affected than other countries for reasons explained here and here.  Economic growth, while down from the 9 percent annual rate prior to the crisis, will be about 5.5- 6 percent this year.  Moreover, rural India – where the bulk of voters live – has done well.  Indian agriculture, which has been relatively insulated from the world economy, has been resilient (good monsoons for five years have played their part) and even thriving (sales of cell phones and two-wheelers have been perky).  The ruling Congress government benefited enormously from these economic conditions.

Internationally, the Indian election results and the performance of its economy during the crisis raise the question of whether the Indian approach to globalization—not too much foreign finance like the Eastern Europeans and not too export reliant as China—has some merit.  Goldilocks globalization and dynastic democracy is the model that India is offering the world.

By Arvind Subramanian

6 responses to “Guest Post: Interpreting The Indian Election

  1. “Dynastic Democracy”?

    I should expect this to be a good idea why?

    Not that there is any escape. Al Gore Jr., Hillary Clinton, George W. Bush… We are basically India already.

  2. While the GDP has been growing, many Indians probably do not see improvement in their lives, as for example, P Sainath shows here. ( http://www.indiatogether.org/2009/mar/psa-forbes.htm)

    This election result is not easily explained by anti- incumbency and the economy doing well and so on…and here is why:

    a) I think the economy was doing better than now during the last elections and still the BJP was voted out of power. In fact, the feel good campaign of BJP then was a complete failure…

    b) Anti-incumbency was in great evidence even this time around in states like Uttar Pradesh (where BSP finished a distant third), West Bengal (where the communists lost after a 30 year rule) and Kerala where the ruling LDF lost.

    c) You do not talk about electoral arithmetics and alliances (made and not made) which probably gave the UPA the kind of victory they got. That was probably a biggere reason than any great economic performance.

    d) I believe Indians dont vote for a central govenment. People vote for local concerns. If you look at the states where local and national elections were held together, people generally voted for the same parties. No thoughts like this party locally and congress in Delhi. Similarly, ministers like Chidambaram who apparently delivered the economic performance which you claim resulted in Congress succcess, almost lost the elections. So, I feel people still voted local and in the end it added up nicely (accidentally?) for the congress party.

    e) I dont think India needs Rahul Gandhi to be prime minister. I cant think of any good reason why anyone should propose or want that when you have an experienced and educated prime minister who is around and performing. Unless one is a fan of dynastic rule or the gandhi family. Of course, like you, the press has been speculating that this might happen, not surprising since we Indians love Masala!

    Finally, your suggestion at the end that India could offer a new model of development based on dynastic democracy is frivolous.

    Unless you were writing tongue firmly in cheek.

  3. Fixed the link issue in my comment above. Here is the correct link.

    http://www.indiatogether.org/2009/mar/psa-forbes.htm

  4. Reality Check

    Yes, use as a model a country whose society is based on the caste system, which is ruled by an aristocracy and in which the working poor are brutally exploited. Oh, and http://en.wikipedia.org/wiki/Poverty_in_India .

    Haha, this is a good joke. Didn’t know Baseline Scenario has turned into Comedy Central.

  5. I feel that its not so much the Congress winning, than the Left and BJP losing.

    No one is really blaming the Indian government for the economic downturn because the downturn in India is not as bad as in other parts of the world.

    Also, there have been terrorist attacks when the BJP ruled also, so, for them to say that the government has not been able to protect the country doesn’t make any sense.

    The Muslim population is wary of the right wing BJP ruling at the centre and even the outside chance of Modi becoming the PM means that all those votes are lost for the BJP. The same must be true for other minorities also.

    There has been real progress and development on the ground and the country is doing much better than it was ever before.

    The reforms process has slowly moved ahead and most people don’t seriously think that either the BJP or Congress will reverse it or add to its speed substantially.

    In such a scenario, people probably felt safer to go with a much more secular government with cleaner records than the hawkish right wing BJP.

    Stability is good though and the Congress led alliance should do much better than the last five years.

  6. Another significant aspect of election results would be diminished ability of corporate (lowecase c) India to use small regional parties to further their agenda. Mulayam Singh Yadav’s Samajwadi Party (SP, from Uttar Pradesh) is a well known front for Anil Ambani’s Reliance Communications. M Karunanidhi’s Dravida Munnettra Kazhagam (DMK, from Tamil Nadu) is well known for selling favors to the highest corporate bidder. And Mamta Banerjee’s Trinamool Congress (from West Bengal) and Sharad Pawar’s Nationalist Congress Party (NCP, from Maharashtra) have similarly dubious records.

    These parties, though winners in their respective states, are likely to have diminished influence moving forward. The Samajwadi Party is already out after overplaying the Anil Ambani agenda and ticking the Congress off pre-election. Even though DMK, TC, and NCP will be part of the UPA Government, the Congress Party is not dependent on them for survival. Hence, in addition to Congress being able to push its own agenda (and peddle its own influence), corporate India will have less ability to use the regional parties to get its way.

    Now, of course, Congress can be influenced too. But that requires big players. Like Mukesh Ambani. So, little guys like Anil Ambani will be out of favor, but big guys like Mukesh Ambani will prosper. “Big Enough to Manage (the Government)” would be the keyword.