Welfare benefits have created a revolution of rising expectations

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Published: December 11, 2018 2:49:06 AM

You expect more from those who deliver, and are disappointed when reality and expectations do not match. But does it result in throwing out those who deliver?

It is mandatory that all election forecasts come with a statutory warning—poll forecasting is only for dummies, or election junkies, or both!

It does not take a weatherman to tell you that the Congress party (INC) has put in everything it has (plus some borrowed amount) into the election campaign for the five states that have gone to the polls in November-December 2018.

According to the exit (and opinion) polls, this investment will have a huge payoff on counting day, December 11. The reason why this is expected, in capsule form, is as follows. The BJP won the 2014 general election by a landslide; expectations were high, and the voter is disappointed. She voted for change, but instead got more of the same—as Arun Shourie likes to put it, BJP is INC with a cow. This jibe no longer holds since the Rahul Gandhi-led Congress, at least in Madhya Pradesh, is trying hard to convince the voter that they are even more cowed than the BJP.

One indication that the stakes are high in this election is provided by an editorial in the prestigious London based newspaper, Financial Times, “Modinomics has yet to deliver for many in India”. My conclusion about the success of Modinomics is radically different, and orthogonal to, the view presented by the FT, and most English-based newspapers in India. In contrast to earlier regimes, the Modi government has emphasised the welfare of the poor, and more so than any other regime.

There have been two distinct, yet related, prongs to the Modi approach to welfare improvement for the bottom 70% of the population. Only 30% of the Indian worker has income over Rs 2.5 lakh, the minimum level of income necessary to be eligible to pay income tax. The BJP realises that demonetisation hurt the top 15% to 20% of workers, especially those belonging to the non-salaried class. Why the distinction? Because the less than 10 lakh income salaried class has benefitted from income tax cuts.

Next time you want to identify the protesters against demonetisation (and the Modi-led BJP), do a simple mental check—does this person report income of more than Rs 2.5 lakh a year and is in business, or is a professional (doctors, lawyers, accountants, etc.)? This category of workers was hurt badly by demonetisation because of confiscation of excess cash holdings and, more importantly, because of increased tax payments. No one likes to pay more taxes, least of all the well-heeled traditional elite. In other words, opposition to Modi from the elite is most understandable.

But does it play in 70% rural India? On a recent Limousine Liberals election trip (the 26th such trip since 1998), I was part of a 15-member team that visited Madhya Pradesh and Rajasthan in the fourth week of November. As is our custom, and our won’t, we travelled to villages to obtain a sense of things on the ground (the hawa). My findings: Firstly, almost no one we met will change his vote from Congress to BJP; while there were several voters who said they were shifting towards Congress from the BJP.

Secondly, welfare benefits are reaching the people—so much so that there is now a revolution of rising expectations. Possibly my most heart-warming experience in my work as a (development) economist was when, in a dominantly scheduled caste village near Guna, MP, I was confronted by six angry young women. They were vocal, and self-assertive (in a very positive way). They were demanding their rights. What rights? The BJP government has an extensive toilet building, and house building, programme around the country. India has always had subsidies in the name of the poor, but for the first time, I was able to witness these subsidies at work. Hence the loud complaints.

Toilets have been built, but it seems not without a down-payment to the sarpanch of the village who handles the interaction with the government in New Delhi. (Upon a photo verification of the toilet, Rs 12,000 is deposited into a woman’s bank account). How are poor people going to obtain the few thousand rupees necessary for construction to start? Not all deserving people in Indian villages (the bottom 50%) can be the first to get their toilets and houses built (costing Rs 2.5 lakh per house and paid by the government). There is a queue, and those whose turn has not yet come are complaining. Then, with toilets, there is a water shortage—and women are complaining because they have to fetch the water some distance away. Genuine, legitimate, complaints. But the same women are sending their children to school and are proud of the girls doing well in college. And yes, those who have the toilets are using them, especially the women.

There is another dynamic (strategy) at work. It is worth noting that the major schemes of the Modi government have women as their prime beneficiaries. Let us recount the list—liquefied petroleum gas cylinders so the women don’t cough, or die, from smoke inhalation; beti bachao, beti padhao (educate the girl and save the child); the bank-accounts in the recipient (primarily a woman) name for welfare transfers from the centre; toilets for the poor (read, women); and housing for the poor.

One interesting stat to look out for is an increase in turnout, especially of women (relative to men). MP has reported a 3.5 percentage point increase in female turnout. Who will this vote go for? My sense, the deliverer of expectations, the BJP.

The buzz is that INC+ (Congress plus allies like TDP in Telangana), will win at least two of the four major states involved in this election (Chhattisgarh, Madhya Pradesh, Rajasthan and Telangana), with near certainty in both opinion and exit polls of a win in Rajasthan. Note that there is virtually zero change in the forecasts of the opinion and exit polls. Some seriously believe that INC+ will win all four. My forecast is orthogonal—despite super anti-incumbency odds, BJP will win 3 and TRS will win one, i.e., INC+ will lose all four states.

Some notes to the calculations. Proprietary models determine the likely vote share, and the resulting seat forecast. For Telangana, farmers have fared much better under KC Rao than farmers in Chandrababu Naidu-ruled Andhra. This is because of KC Rao’s enlightened policy of income transfer to farmers—Rs 4,000/acre, twice a year.

Contrary to all forecasts, we obtain a win for Vasundhara Raje in Rajasthan. She has instituted a number of economic reforms. An important reason she is likely to overcome anti-incumbency is the large win she obtained in 2013. She obtained 45.2% of the vote to INC’s 33.1%—that is a 12.1% margin.

Rajasthan has had frequent changes in governments between the two contenders—BJP and INC. The Congress’s margin of victory in 1998 was because of a 5.1% swing in vote shares from the BJP to the Congress. Replicating that historic victory will still result in the Congress obtaining only a 38.2% vote share in 2018, to Raje’s estimated vote share of 40.1%. Our seat-share estimate for BJP in Rajasthan is a decline of 48 seats from the 2013 level; our model accounts for this anti-incumbency effect but we don’t find that the effect is so strong as to allow INC to win. In addition, the National People’s Party (NPEP, led by Kirodi Lal Meena) merged with the BJP in early 2018; this “adds” 4.3% to the BJP margin in 2013, to 16.4%. This makes the hurdle for INC that much steeper.

It is mandatory that all election forecasts come with a statutory warning—poll forecasting is only for dummies, or election junkies, or both! History is replete with Waterloo forecasts—indeed, the fear of all forecasters (including self) is the horribly wrong forecast we all face at one time or another. Hence the forecasters motto: Forecast often, and always remind people when you are right!

-The author is Contributing editor, Indian Express and consultant, Network 18. Views are personal. Surjit tweets @surjitbhalla

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