Shoring Up Sinking BJP in Five Months will be a Herculean Task

The Bharatiya Janata Party led by the flamboyant Prime Minister Narendra Modi has been humbled in the just concluded State Assembly elections in Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana and Mizoram.

The Congress has unseated the BJP in two large States in the Hindi-Hindutva heartland, namely Rajasthan and Madhya Pradesh. Thought to be BJP strongholds, Rajasthan had in addition, a high profile Chief Minister Vasundara Raje; and Madhya Pradesh had a hardworking and amiable CM, Shivraj Singh Chouhan. And yet, the BJP was found wanting this time round. It was clueless about the change in the peoples’ thinking.        

The party’s efforts to enter South India through Telangana and the Christian tribal belt in the North-East through Mizoram also crashed.

These results give an idea of the enormous challenges the BJP  has to face in the five months it has to prepare for the parliamentary elections due in May 2019.

Whether the party can meet the challenges successfully or not will depend on its perception of the situation; how realistic and accurate that assessment is; and what action it takes to remedy the situation as it sees it.   

Basic Reasons For Defeat

An analysis of the reasons for the BJP’s defeat in the States which went to the polls will give an idea of the challenges before it.

In Rajasthan, Madhya Pradesh and Chhattisgarh, both rural and urban voters appear to have been alienated from the long standing BJP-led governments. Overconfident BJP regimes had taken the people for granted or had offered solutions to their problems which were of no use.

According to IndiaSpend, between 2004 and 2016, Madhya Pradesh had recorded 16,932 farmer suicides--more than three every day, and the fourth highest number nationwide.

Chhattisgarh followed with 12,979 suicides--nearly three every day, and the fifth highest nationwide.

Rajasthan ranked the 11th highest with 5,582 suicides during the same period.

The BJP governments’ only answer to the agrarian distress has been (and will be), to raise the Minimum Support Price (MSP). But the MSP, even if delivered efficiently, will only be a palliative and an inadequate one at that, given the agriculture sector’s adverse terms of trade with the industrial sector; price fluctuations due to natural and man-made causes; the role played by middlemen; and the lack of credit and local storage facilities.

No State government, whether of the BJP or the Congress, has thought of tackling these basic issues of the farm sector. There is no inkling of a change coming about, either.   

Both the urban and the rural populations suffered due to the sudden demonetization in 2016. Stress due to demonetization, which made 86% of Indian currency worthless all of a sudden, led to more than 100 suicides. At least 1.5 million lost their jobs and 150 million were without pay for weeks.

Though touted as a surgical strike against black money holders, demonetization was a comprehensive failure. In India, fortunes made through corruption are not kept in cash at home but are converted into shares, gold and real estate or stashed away abroad. In 2014, Modi promised to put all the black money unearthed into peoples’ accounts. Each Indian will get a bonanza of INR 15 lakh be said, a thought which made people salivate.  

When he came to power with a massive majority in 2014, Modi promised to generate 20 million jobs a year. But more than 7.2 million jobs meant for the 15-24 age group “were lost” over the last four years according to credible reports.

Job creation in India is at an eight-year low. This created an undercurrent of anger among the burgeoning and politically sensitive middle-class. Excessive excise levies led to historically high prices of petrol and diesel, in spite of lower international crude-oil prices.

The Modi government had collected US$ 150 billion in taxes on petrol and diesel since 2014. But instead of transferring the benefit of this to the people, the government put more burdens on them.

The previous Congress-led United Progressive Alliance (UPA) regime had lifted close to 140 million people above the poverty line between 2004 and 2014 through its rural employment guarantee and other poverty alleviation schemes. But there are no figures  on how many people the Modi regime had lifted from poverty.

Under the Manmohan Singh government, there was a fivefold increase in agricultural exports. But exports have now come down by 21%. At the same time, agriculture imports have risen by more than 60%. This had hit the Indian farmer.   

New investment is the lowest in 13 years. Bank credit growth had sunk to a 63-year low. Loan growth had fallen to 5.1%. But the rich and influential were allowed to loot the state-owned banks.

The US$ 1.77 billion Punjab National Bank (PNB) scam has hit the Indian banking sector very hard. Nirav Modi a Modi cohort, fled the country without repaying his debts. In February 2016, billionaire Vijay Mallya, who became an MP with the help of the BJP, siphoned off US$ 1.4 billion and fled to the UK.

In October 2017, bad bank loans and Non-Performing Assets (NPAs), stood at US$ 145.6 billion, This accounted for 12.6% of the total loans given out by  the nationalized banks. NPAs in nationalized banks accounted for about 87% of gross NPAs by the end of March 2017. This meant that Modi was responsible.

Cozying up to the corporate sector, while turning a blind eye and a deaf ear to the farmers’ and the middle income groups’  plight, the BJP government had written off loans to the tune of US$ 31 billion. This was done with money collected as taxes from the man in the street.

On the one hand Modi said that he wants every Indian to have a bank account. But on the other hand, the Reserve Bank of India (RBI) made banks levy charges for holding less than a prescribed minimum balance. The State Bank of India, whose customers are mostly poor people, levied such charges totaling US$ 260 million between April and September 2017, according to Ministry of Finance.

Fruitless Trips Abroad

According to information collected through the Right To Information Act, Modi had made 41 trips to over 50 countries in the first four years of office, spending 165 away from India. All that was ostensibly for attracting Foreign Direct Investment (FDI) for his much touted “Make in India” project.

But the results were woefully short of the promise.

The number of FDI companies was 6433 on March 31, 2016. But only 1820 of these were in manufacturing. The rest were in the IT and service sector. Compare this with the non-FDI sector: Out of a total of 304,978 Non-FDI companies, 78,337 companies were in manufacturing.

While the FDI companies had capital, the non-FDI companies were woefully short of it. Domestic savings and domestic capital formation have been clearly below the benchmark for a growing economy.

Will BJP Get Out Of The Rut?

In times of crisis, the BJP has had a tendency not to abandon the path it had chosen but to stick to it like all ideologically oriented extremist parties. As a right wing Hindu communal or Hinduva party, it will stick to policies in tune with its basic profile.

There will also be pressure to give priority to its “core constituency” namely, Hindus with a Hindutva mindset. The movement to build the Ram temple in Ayodhya in place of the demolished 16 th.Century Babri Mosque will be intensified.

In addition ,there will be a movement to demolish other Muslim places of worship including Jama Masjid in Delhi, as demanded by BJP MP from Uttar Pradesh, Sakshi Maharaj.

In other words, the Hindutva agenda which failed to deliver the goods this time round in Rajasthan, Madhya Pradesh and Chhattisgarh, will not be downplayed but tweaked to give it more punch.

Given the difficulty in addressing issues of bread and butter, the BJP will use the easier route to power – Hindutvic propaganda to capture the religious minded Hindus, and  sabre-rattling vis-à-vis Pakistan to capture the imagination of the Indian “nationalists.”

On the economic plane, the BJP will continue to favor the big corporates. It will hope that the middle classes will be taken care of by mesmerizing Hindutvic and nationalistic rhetoric. The party will hope that farmers can be silenced by promises of higher Minimum Support Prices.  

But Hindutvic rhetoric will have to be matched by performance on the economic front if it is to be effective. Hindutva can only be icing on the cake as past experience shows.

The condition of the farmers is not going to change given the  skewed way in which the market economy works and given the lack of infrastructure in the farms to enable farmers to face the challenges posed by the emerging liberal, globalized and market economy.

Still believing that demonetization had worked, Modi has appointed as Governor of the Reserve Bank of India Shaktikanta Das who as an official had secretly planned and executed demonetization. The other appointment which indicates that Modi is unrepentant is of Krishnamurthy Subramanian as Chief Economic Advisor (CEA)  who as an academic lauded demonetization

While it is not clear if a Congress regime will be much different, that party  is at an advantageous position now.

In the next five months Congress will have the luxury of sitting back and criticizing and mocking BJP. But the BJP, being in power at the Center, will have to perform if it is to come back to power in May 2019.