The latest opinion polls seem to confirm the months-long trend of increasing support for the BJP and the NDA alliance, with the newest projection indicating that the NDA will get a majority without having to rely on additional coalition partners. What will this mean for India?
Everyone agrees that voters are looking for national leadership that will improve their economic lot, while also reducing the day-to-day travails of dealing with government corruption. Voters also care about their particular identities (caste, religion and so on), but these factors look likely to be swamped by an overwhelming weariness and frustration with the drift of the last few years.
Voters are likely to be pleased in the short run, and maybe even for the full-term of the new government. After all, Indiaís growth potential is clearóat current investment rates, and given the nationís demographic trends, 8% growth should be achievable routinely, once the extreme political uncertainty that has weighed down the economy is removed. Global growth, too, looks to be reasonably good over the next few years, barring political eruptions in places such as Ukraine or the Middle East.
Narendra Modi has made it clear that he will be a strong leader, focused on encouraging business investment and economic growth. He is likely to put together a governing team that carries out this mission reasonably effectively. Without the need to placate additional coalition partners, the NDA will be able to avoid the kind of disastrous corruption that the UPA got when it gave the telecoms ministry to the DMK. The new NDA clearly has close ties to Indian business, and Japanese or South Korean style collaboration between government and big business may indeed yield growth pay-offs, including structural changes that can come from pursuing large new global opportunities. Foreign investors, too, are likely to welcome the NDA. Despite the economic nationalism of the old-style BJP, that can be no worse than the confusion and rapaciousness of the UPA government in matters such as retrospective taxation.
Sustaining growth will require investment in human capital, and here is where the nationalist ideology may be tested. Higher education needs a rapid increase in investment, and that will require not just money, but human capital that is in short supply in India to begin with. Will the new government be willing to allow foreigners in with ideas as well as lessons for Indiaís youth? The UPA had taken steps in the