My last column, over a month ago, was about the reasons for India’s low ranking in national lists of “happiness,” a shorthand for survey measures of self-reported life satisfaction. In that column, I suggested that Indians have been expecting better than what they have been getting, especially in material well-being, and that makes them unhappier than numerical measures such as GDP per capita and healthy life expectancy might predict.
This column is being written after the conclusion of India’s general election. Pre-election polls predicted a victory for the ruling coalition, exit polls after the final phase only strengthened that conclusion, and the final verdict was a thumping majority for the BJP. The stock market has reacted positively, so perhaps one can conclude that investors are happy with the outcome, but they are a small proportion of the population. Perhaps, relief is a better characterisation of the emotion behind the response, since a stable government is preferable, other things equal, for the progress of the economy. The premise here, based on the last three decades of Indian experience, is that any government will pursue more or less similar economic policies, differing at the margins in terms of how and to what extent certain kinds of redistribution are carried out, or which business people are favored, but not in the fundamentals of tax policy, expenditure policy or monetary policy. A slow but perceptible economic reform process is a given.
What was most noticeable about this election campaign was the absence of much, if any, serious discussion of economic policies, beyond attempts from the Opposition to create a version of a universal basic income program. This seemed to be a contrast to recent elections elsewhere, where there was debate on whether government policies were promoting adequate levels and sharing of economic growth. Instead, this was a campaign of fear and division, especially from the ruling party. Even in the last US presidential election, Donald Trump combined his xenophobia, racism and reactionary social policies with an economic message, appealing to those who have been left behind by globalisation and technological change.
But in India, the majority of the population has not even had its first chance, so there is nothing for them to miss, except by comparing themselves to those in India who are racing ahead. And the incumbent could hardly blame the failure to deliver economic benefits more robustly on the preceding government, a full five years after its ouster. In mid-May, Simon Mundy, in The Financial Times, offered a pessimistic view of India’s prospects, based on strong evidence of weakness in consumer demand, both rural and urban. Soutik Biswas, for the BBC, offered a similar conclusion, bolstered by the concerns of economists such as Kaushik Basu, who noted the anaemic performance of Indian exports, and Rathin Roy, who observed the failure of India’s consumption story to broaden, so that consumption patterns are looking more like Latin America than East Asia.
Some of this goes back to the continued failures of job creation in India, the lack of sufficient industrial dynamism, including the lack of positive feedback loops from growth in industry to skill acquisition to accumulation of experience to new firm creation. Because the last five years have seen a focus on consolidating political power, and on pursuing a particular vision of nationalism, while many reforms that have been ongoing for years across several governments have been carried out, a government headed—for the first time in India—by someone with an urban working-class entrepreneurial background ultimately did not bring much innovation to the formulation and implementation of economic policy.
As a result, the election campaign was an unhappy one, highlighting external threats, and creating internal ones where they do or need not exist. This is not a profound observation: everyone has seen how the campaign was conducted. What is surprising is that the opposition did not really seem to provide an answer or be able to rise above the level and tone set by the ruling party. Perhaps there is no way to accomplish that elevation, when a strong communicator is pressing those buttons for voters that will trigger emotions of fear and concerns for safety. That was certainly the case of Donald Trump, who continues on that path more than halfway into his term.
Milan Vaishnav, in an article in Foreign Affairs magazine, has used the characterisation of what is happening as “The Battle for India’s Soul.” This is not just about the election, but what has been happening before it, and what might happen after it, where certain groups in Indian society are marginalised or even demonised, where a broader concept of national identity is made impossible, and where dissent and difference are suppressed. It is an unhappy state of affairs when reasoned debates about economic policy and inclusive growth are replaced by historical grievances and fear of the future as the basis for political choices. An unhappy election campaign, even if it results in a stable national government, may not lead to a happier population. I hope the pessimists are proved wrong, but discussing how that might happen will need another column.