Remembering 2014
Remembering 2014
In March 2014, I wrote a piece titled Make or break elections in India. As I re-read of the uncertainty India was facing in 2014 I feel queasy. How close were we to the brink!
Let us indulge in a bit of nostalgia.
We are in March 2014. Things are shrill, and Congress and opposition are quite strong compared to today’s situation.
Make or break elections in India
As the election nears, the political discourse has become shrill, divisive, rhetorical but seldom, if at all, insightful. From the economy and markets perspective, there was never a turning point as pronounced as this.
The market favours Narendra Modi, BJP’s prime ministerial candidate. However, the electoral numbers present a challenge. The BJP is strong in the North and West, marginal in the East and almost absent in the South. As per recent opinion polls, North and West are firmly backing BJP. The East will be a crucial test for BJP’s party machinery, while the South will depend upon alliances.
At the same time, opponents are getting their act together. Aam Admi Party despite its ludicrous politics, enjoys continued support amongst its followers. If not anything, AAP may limit BJP’s seat share below the 180 mark. Congress may gain from its many populist gifts to rural India in the past decade. Congress is a shrewd tactician at election games and can still ratchet up 150+ seats simply because of its truly national presence. The third front is realigning itself to increase the bargaining power at the time of government formation. The lack of coherent leadership within the third front makes it a target for alliances and partnerships, legitimate or otherwise.
A rational result hints at the BJP winning 190-200 seats. This number was adequate to run stable coalitions in the past. However, Modi’s polarized image may present a problem, and a lot will depend on the tally of other parties. If Congress wins 150+ seats, there is a reasonable possibility that the BJP may be sitting in opposition even after winning 180 seats. The BJP needs at least 230-240 seats to decisively win the mandate.
From the market’s perspective, there are three likely outcomes of this national election – a coalition led by a strong BJP, a coalition led by a weak BJP and an indecisive mandate.
The first case will allow Modi to implement a model of economic reform he has articulated. It is a big challenge as there is little time to address the breadth of issues facing the economy. In case of a weak BJP-led coalition, things will become uncertain. We must realize that the national mood is pro-Modi and not exactly pro-BJP, and BJP continues to be riddled with its old problems even today. In a weak coalition Modi-detractors may not allow a broad-based economic reform. This situation will test the political ability of Modi to maintain stability, something Vajpayee achieved with the help of Brijesh Mishra.
However, in case the electorate throws up an indecisive mandate, we are positively doomed. Our present predicament leaves less room for experimentation or populist adventurism. It will result in a lost decade, and some of the damage caused may leave deep scars. A lack of coherent policy may make low growth endemic and entrench our structural problems.
There is hardly any margin of error this time, but then, the Indian voter has demonstrated surprising political maturity in the past. So, let us hope for sanity.
(spell checks and articles added. Here is the old link.)
Back in 2024
Welcome back to 2024. As the election draws to a close, do you think Indian voters will show the same maturity as they did in 2014? This, too, is a make-or-break election, in a way. While we have made a lot of reforms, there is a long, long way to go. The window of opportunity has shrunk considerably.
In 2014, we were playing for survival.
India was weak, government was loaded with debt. There was no fiscal space. The previous government had hung a few albatrosses around the neck of the new government - Right to Education, Right to Food, freebies galore and no money to fulfil those promises. It was an economic sabotage.
The private sector was sabotaged. With the government using the public sector banks to forcibly lend to certain individuals, scams were rampant. Actual investments in Indian competitive advantage were limited. This meant India was not competitive in global trade. Banks were saddled with bad loans and Non-performing assets.
Militarily, too, we were sabotaged. We were flying 1960s MiG planes. The Tejas fighter was still a dream. Army still carried the 1980s-designed INSAS rifles. Our 2001 fighter plane procurement was languishing as prices were rising. No missile development, no major private weapons manufacturing.
Internal security was in disarray. With Pakistan-sponsored terrorists striking at will, internal security left a lot to be desired.
Now, we are playing to win!
Today, we have hope to win. Yes, the global window of opportunity is small. There is a lot of uncertainty because of war in Europe and the Middle East and the potential threat in the South China Seas. Chinese belligerence has increased, too.
But we have a strong, decisive government that is following a pro-active approach. The reforms are happening, infrastructure is being built, quality of life is being improved, and we are doing all this without corruption.
A misstep at this juncture will push us back into the blackhole of a low-income, poor country. The right step will set us on the path to becoming a 10-trillion-dollar economy.
All the best for the results!