In my last column, I wrote about learning from China. The experience of other countries, especially those that share key characteristics with India, is obviously important as a guide for policymakers. But there are important lessons from India?s own experience. Democratic voting allows the individual experiences of citizens to be articulated, albeit in an aggregate and imprecise manner. Drawing the right lessons from India?s latest elections is vital.
The stock market seemed to conclude that the outcome in Uttar Pradesh was a bad one for India?s economic future. Since the UP state assembly election did nothing to consolidate the political position of the ruling party?s heir apparent, it may be that uncertainty and jockeying for position at the Centre will continue, both within the ruling party, and in the wider coalition. Capricious coalition partners and powerful ministers may continue to block or divert needed and potentially beneficial economic reforms.
But the lesson from UP is positive, as several commentators have recognised. Let?s put it in context. There are at least three factors that could influence voters: the personal qualities of the leaders, the commonality of group interests, and the track record and predictions of performance in governance. UP teaches us that voters are not much swayed by charm, charisma or even acts of humility. UP also teaches us that voters? perceptions of group interests are undergoing change. It is less about static caste or religious identification, and much more about commonality of economic interests. On both these counts, the Congress seems to have got it wrong, emphasising individual leadership characteristics, and dimensions of identity that are being overtaken by events.
The lesson of UP is in fact that now the third factor matters most for voters. It always has been important, but now they know better what is possible. UP voters only had to look to neighbouring Bihar to see what a difference better governance can make. Identity and leadership are not irrelevant, of course, but have to be part of a credible package of policies that promise sustained improvement in people?s daily lives, not just handouts that just perpetuate the status quo. Patronising the poor will not help India?s politicians any more. I would also hazard that voters are not too concerned about corruption?the vote was not a moral judgement. Voters expect a certain amount of patronage and pilferage, and may even be happy to participate. They just do not want corruption to make their daily lives miserable, or keep them from getting ahead. They want good governance (at a very basic level), not moral perfection.
Whether the UP outcome is a positive for India still involves a tradeoff. The tradeoff is between poorer performance at the Centre, because of uncertainty and infighting, versus gains at the state level. But this is only a short-run tradeoff. If UP and Bihar can grow faster, this represents a significant fraction of India?s population that was not being given the chance to participate fully in faster growth. This will have longer-run benefits. By losing in UP, the Congress party is (unwillingly and unintentionally) promoting more inclusive growth.
Because UP is so large and central, some of the other election results received less attention than they might have otherwise. The Punjab outcome also has lessons. The Congress lost there as well. As in UP, the shifts in vote shares were not large, so one should not overstate the sagacity and determination of voters. But in Punjab, the Akali Dal broke precedent by returning to power. As in the case of the winners in UP, they offered a development message. The fact that they were believed, despite their abysmal performance so far on many fronts, shows that the Congress has failed to formulate and articulate an agenda that voters can believe. The Akali Dal also illustrated the changing nature and salience of group identities in politics. They fielded Hindu candidates, and picked up seats at the expense (indirect, not directly) of their Hindu-nationalist ally.
Punjab is a small state, but its role as a provider of surplus foodgrains to the rest of India gives it a disproportionate significance. All the political parties in Punjab have overseen and implemented policies that are destroying the groundwater table in Punjab, and will turn it into a desert very soon. Perhaps, just as it took a right-wing US President to open up to China, it will take a party that draws support from farmers to fix Punjab?s farm policy mess and avert the looming disaster.
The voters are not always right. In UP, they had several clear alternatives, and made what seems to be by far the best choice. It is likely to be rewarded with better governance and higher growth, just as happened in Bihar. In Punjab, the choices were less good. It remains to be seen if the lesser of two evils can actually lead to better outcomes than in the recent past.
The author is professor of economics, University of California, Santa Cruz