It is not often that a state election result impacts the entire nation’s economy and its politics. The Gujarat polls, the results of which would be out on December 18, could be an exception to that rule. I am no psephologist, and given the track record of our iffy exit polls, I’d rather not hazard a guess.
How important the outcome of the Gujarat election will be for PM Narendra Modi and BJP president Amit Shah needs no reiteration. It is their home turf, they are expected to know what the people of Gujarat want more than anyone else and the Congress has been in shambles in that state for two decades. As one BJP ideologue in Delhi put it to me, until three months ago, it was just an election that had to be gone through to fulfil a constitutional mandate; but that perception has suddenly started changing.
Congress managers, who had been found wanting in taking on the government for over three years, have suddenly turned belligerent on social media, mastering the art that Modi’s team was good at and even doing a shade better. Simultaneously, Rahul Gandhi has had a makeover.
No more the butt of jokes, he is now seen asking the right questions at the right time and BJP leaders are compelled to reference him more than they would like to. Either way, he has started being in focus. The 40-plus scion of the Gandhi dynasty now manages to pull together anti-Modi forces though what kind of damage the likes of Hardik Patel can do to the BJP will be known only next Monday.
To go back to what that BJP ideologue said to me, what was expected to be a walk in the park is not turning out that way, and the terrain, however familiar it was to Modi and Shah, does not appear to be affording them an easy ride. Even if we are not to give credence to surveys done by some agencies which have suggested a sharp but steady decline in the BJP’s vote share between August and end of November, party leaders too confess that the gap has indeed narrowed to a degree that does not offer it adequate comfort.
What is interesting about Gujarat is that it is not like other states when it comes to vote shares and the number of seats won by different parties. In most states, the difference between the winner and loser often ranges between 2-3 per cent, sometimes even less.
A double-digit difference in vote shares invariably means a landslide like it happened in Rajasthan in the last election when Vasundhara Raje won 160-plus seats outof 200. When Modi won Gujarat in 2012, the BJP secured nine per cent more votes than the Congress but the latter still managed to win 61 seats while the saffron party ended up with 115 out of a total of 182.
How it would translate into seats if the parties are evenly balanced at 43 per cent vote share each, as some predictions have suggested, or if the gap narrows to five per cent—the worst the ruling party leaders expect—is anyone’s guess. While a victory at least similar to 2012 is what Modi-Shah are expected to ensure, a close finish in terms of the seats won might not only put them under pressure but also provide the much-needed boost for Rahul.
Though almost all the exit polls seem to suggest that the BJP will be returned to power with a distinct if not large majority, but with a vote share difference of 4-5 per cent, it still is likely to induce a rethink on the way forward to the next general election both in terms of party strategy as well as governance.
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Bureaucrats in Delhi are of the view that the direction the Modi government will take in 2018 on the economic front would largely depend on the outcome of the Gujarat election.
A comfortable victory for the BJP will embolden it to push for more reforms, put in place more stringent measures to check tax evasion and augment revenues and do whatever else is needed to ensure that the fiscal deficit remains well within the target. A close finish or an unexpected outcome could compel the government to shift its stance.
According to some officials, the two blueprints are almost ready, and one of them will be picked for implementation as early as January depending on the signals from Gujarat. A directional change involves a slew of measures meant to benefit farmers and small and medium businesses and radical tweaking of GST tax slabs, over and above what the government has already done after sensing the mood in the run-up to the elections—all intended to address the rural and urban distress that appears to have set in after demonetisation and GST by way of reduced earnings/loss of jobs, caused by an overall slowdown in the economy.
Also in the pipeline is a mega health insurance scheme that covers a significant section of the country’s population, which BJP managers believe could be a game changer. Already some states like Telangana, Andhra, Karnataka and Maharashtra have health insurance schemes that cover all those in the BPL category and each of them spend in the range of Rs 700 crore to Rs 1,000 crore per year on the scheme. With the Rashtriya Swasthya Bima Yojana launched by the Centre not doing as well it was expected to, the GoI has now come up with this new programme which merges those implemented at the state level.
A good chunk of the burden, in the range of Rs 20,000 crore per annum, will be borne by the Centre while states may be asked to chip in with their share. Other than government employees and I-T payers up to a certain limit, almost everyone else is likely to be covered under the new scheme if it comes to fruition.
A course correction could mean lower revenues, the fiscal gap going up to more than the desired level and a bad stock market compared to the stupendous run in 2017. Add to this Trump’s idiosyncrasies, the US Fed hiking rates, global uncertainties and the picture is as clear as one can see.
G S Vasu
Editor, The New Indian Express
Email: vasu@newindianexpress.com