Make no mistake about it. The Gujarat election result is important, and particularly so for the Congress. A close fight will signal its revival, and signal to the BJP that Modi’s personal popularity will no longer dominate the vote as the electorate gets increasingly concerned about a slow growth economy. First, some important and necessary caveats. Election forecasting is a hazardous occupation and has felled all “experts” at one time or another. Our political models have worked rather well over the last decade, and we were the only “analyst” to get both the surprise loss of the BJP in Bihar 2015 and the surprise win in UP 2017 right. Which means that the odds are against us getting the Gujarat election right. Nevertheless, we must continue until we get an election very wrong. So, here goes.
What do the opinion polls say? Eight opinion polls have been conducted for the Gujarat election. Of the four polls conducted in December, two polls have the BJP winning 134 seats (more than 70% of the seats) in a 182-seat legislature, and two polls have the BJP winning 102 seats. The worst-case (for BJP) opinion poll is the one conducted by CSDS which has both the BJP and the Congress tied in with a vote-share of 43% each. However, whether CSDS wants to hedge its forecast or their models actually show this equal vote-share of the two sides, BJP is forecast to win by 11 seats, 95 to 84 with an equal vote share despite being a fifth-time incumbent. (CSDS does not make any seat forecasts—the television network, ABP News, uses CSDS voting data to make forecasts.) There is a hint here that CSDS does not expect the BJP to lose the election. There is evidence from actual polling to suggest that the BJP will win in a non-tight race. For those who study turnouts, there is the broad result that increase in turnout helps the challenger—a decline in turnout helps the incumbent. In the first phase of Gujarat polling, held on December 9th, turnout was lower by 3-4 percentage points compared to the previous (2012) Assembly election. This suggests that the 2017 result will favour the BJP.
The accompanying table reports the opinion polls to date (as well as our own forecast). Note that of the eight opinion polls conducted, both the outlier results are by the same organisation, CSDS. In their first survey (August 31) CSDS poll expected BJP to repeat their 2014 Lok Sabha success (when the BJP won 160 assembly constituencies). In their latest December poll, also an outlier, CSDS expects BJP to win only 91-99 seats. The other six polls, done at very different times and different organisations, all have a near identical range for the BJP—115-130 seats.
The Lokniti CSDS tracker poll has been showing a consistent decline with the passage of time. CSDS is a reputed survey organisation; however, its forecasts over the last three Modi years have broadly been characterised by a small bias against the BJP. While all pollsters have biases (they are human), the fact remains that reputations can also be affected by “bad” forecasts. In other words, the latest CSDS forecast should be taken seriously.
According to the media, there are four reasons to infer that the latest CSDS report is “genuine”. (i) Congress’s dynasty-candidate (equivalent to a Kennedy running in the late 1960s) Rahul Gandhi had a successful tour of the US speaking at colleges, etc. Most mainstream US publications, and mainstream English media in India, emphasised that Rahul Gandhi had turned a corner and was seen by ordinary people (both in India and abroad) as now ready to take on the leadership of the Congress. (ii) By all accounts, Rahul Gandhi has run a mature political campaign, and one which has constantly emphasised the bad state of the economy. It has been almost explicitly patterned after Bill Clinton’s It is the Economy, Stupid campaign of 1992. (iii) The economic facts support Rahul Gandhi’s appeal. GDP (more accurately GVA) has grown by a low 5.6% and 6.1% in the last two quarters, considerably lower than the 8%-plus growth of 2015/16. (iv) Two big economic “shocks” have hit the economy over the last 12 months—demonetisation and the introduction of GST. This has disrupted business, and has hurt the assumed “solid” base of the BJP in Gujarat—the trading community.
Historical data also, surprisingly, points to a BJP win.
(i) Anti-incumbency: If BJP wins Gujarat 2017, it will have done so for the sixth consecutive election. It will then be the second-most victorious state election winner, ever (omitting very small states in North East India, e.g., Tripura). The record for the most consecutive wins, seven, is held by the Left Front in West Bengal, 1977-2006. (ii) BJP’s margin of victory has averaged around 10% in each of the elections since 1995—the minimum margin was 9% in 2012, and the maximum margin in 2007, 11.1%. PM Modi was the BJP state leader, and chief minister, in each of the election years, 2002, 2007 and 2012. (iii) In state elections subsequent to 2014, the BJP has increased its share in state elections by an average of 6 %. Thus, what the historical record reveals is that even if Gujarat is an exception to this increased vote pattern, and the BJP does not gain any additional vote share, it can still expect to win around 115 seats.
What will likely happen in Gujarat, 2017?
The table contains our forecast based on opinion polls, different models, and different assumptions. All indicators (including turnout) suggest the following big conclusion—it will be a mega upset if the BJP were to lose Gujarat. It would be a major surprise if the BJP got less than 105 seats.
The median forecast of our various models is that the BJP romps home comfortably with 120-130 seats. Obtaining 150 seats, as BJP president Amit Shah has predicted, has the same non-zero chance as the BJP obtaining less than 100 seats.
Economy and vikas: Talking points regardless of election result
It is now conventional wisdom that if the BJP were to win by less than a 100 seats, it would be seen as having lost the election. If this happens, it is a safe bet that the economy, vikas, will be the talking point of post-match analysis—in the media, among politicians, and among economists. It is likely that RBI/MPC will come in for stinging criticism from all quarters (excepting the political opposition!). It will be argued that demonetisation and GST were expected to temporarily derail the economy—but why did RBI have to aid the decline in the economy (and jobs) by pursuing an excessively high real interest rate policy? Recall that the Finance Bill authorising the creation of the MPC states “AND WHEREAS the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth”.
Even if the BJP wins comfortably (our base-line forecast), the economy is the only weapon that the political opposition has. Demonetisation is now more than a year old, and GST will likely improve in tax collection. RBI expects the economy to recover to 7.8% in the next 3 months. If it does, the opposition will have lost its most potent weapon against PM Modi’s popularity. If it doesn’t, the opposition will remain in Battle 2019 with a fighting chance.