How Modinomics Won Bihar For The NDA

The last few weeks have witnessed two election cliff-hangers as millions were eagerly waiting to assess the outcomes of the electoral results. The elections conducted in Bihar, as along with the other state assembly bye-elections conclusively establish the exercise to be the largest such exercise to be conducted in the middle of a raging pandemic. The effort needs to be appreciated given the complexity associated with any electoral process.

The key story of the election has to be the inaccurate results of the exit-polls that unanimously showed the RJD led Mahagathbandhan all set to form the government in Bihar. Indeed, it is far more difficult to electorally defend a mandate after three terms and the task becomes nearly impossible when the elections are held in the middle of a pandemic which has caused a significant economic disruption.

The conventional wisdom was that NDA was all set to lose the elections and that the Mahagathbandhan would sweep them. Fast forward to 11 November and we have the NDA form the government.

Many are surprised at the electoral upset and are curious regarding the factors that explain the same. Political analysts, often look for explanations that are political in nature and thus, they stick with the arguments of Congress pulling down the RJD and the argument of AIMIM denting into the minority vote-bank of the RJD-Congress-Left alliance. However, these arguments fail to explain the mandate in favour of the NDA as the presence of these factors should have had an impact across the state and not be confined to a few pockets.

That there was some anti-incumbency that was picked up by the exit and opinion pollsters but it did not translate into votes during the elections, especially during the later two phases is in itself an interesting fact that should be studied in greater detail.

There are alternative explanations and those that explain the strong performance of the NDA not just in Bihar but in the bye-elections across the country.

The first explanation is the systematic breakdown of the caste identities as far as electoral preferences are concerned. In many ways, successive elections have illustrated that caste combinations have started to matter less in terms of their electoral significance. This is an important change in the way voters have started to behave over the last few years and this trend augurs well for the political process of our country.

The question is thus that if caste does not matter then what does?

The answer to that is welfare and delivery of public goods.

The post 2019 verdict resulted in a rigorous study of whether the electoral result was an outcome of welfare delivery and it resulted in a joint article with Surjit S Bhalla – ‘why chemistry trumps arithmetic’. The article can be accessed by clicking here. The welfare argument makes all the more sense in the middle of a pandemic and this has been ignored by most political analysts that expected the rural areas to vote in favour of the opposition. The converse seems to have happened and there are strong economic reasons for the same.

The expectations of a rural backlash made limited sense to start with as the rural economy continues despite the lockdown, as an essential service. There were some disruptions in the rural economy, but not too significant to have an adverse economic impact. This is one of the reasons why in the first quarter even as our overall economy contracted, the primary sector expanded at 3.4 per cent y-o-y compared to the 3 per cent experienced in the previous year in the first quarter.

This was critical as it signalled the lack of economic stress in the rural economy as such. The only concern was the scale of migration that took place during the lockdown from urban to rural areas. However, with increased MGNREGA outlays, a hike in the wages and at the same time a cash transfer program under the PM Garib Kalyan scheme were critical to absorb a part of the shock.

The marginal impact of a Rs 500 transfer in rural areas is extremely significant, more so at a time when the food grain entitlements under the Food Security Act have been extended significantly. As a consequence, what we had in the rural areas was a major pickup in economic activity even as there was no visible economic stress due to the pandemic. This is also reflected in our recovery process which is being led by the revival of demand from the rural sectors which has been witnessed by record high tractor sales or the robust growth of sales of FMCG companies in the second quarter. The key thing to remember here is that the state of Bihar is predominantly rural. The recent agricultural reforms led to a hike in MSPs and subsequently high price realizations in general. These factors too have had a positive impact that could be immediately felt by the voters in the state.

While we wait for more detailed election data to analyse the electoral results of Bihar, we must mention that for the non-services part of the economy, economic activity seems to be on the rebound and there is satisfaction in the way the government has handled the pandemic.

But the key reason responsible for such a performance has to do with the rural sector doing exceedingly well which seems to be yielding political results. This should no longer come as a surprise as moves such as Saubhagya, PM Awas and the Swachh Bharat Mission have resulted in political dividends in the past. Perhaps, now is the time for incumbents, irrespective of their political party to rethink on their economic and welfare policies as we move towards smart governance policies that maximise the impact of public expenditure.