17 November 2015

Why Modi lost the Bihar election


In my CapX article on India’s first budget, I had argued that, despite lacking a majority in the upper house (Rajya Sabha) , given his massive general election victory in 2014 Narendra Modi should have gone immediately for ‘big bang’ structural reforms which a traumatized opposition would have found difficult to oppose. Instead, he chose the dilatory route of winning the various state elections which were due, to give him the majority in the Rajya Sabha he needed, by converting his demonstrated popularity in the general elections in these states into victory in their local elections.

But as I had predicted, based on the experience of reformers around the world coming to power on a big electoral wave, if the reforms are postponed or protracted over time, obstructionist losers from the reforms have more time to coalesce well before there is a constituency benefitting from the changes. This is what happened in Bihar.

The incumbent chief minister of the JDU (Janta Dal United), Nitish Kumar, who had won the previous election in partnership with the BJP (Bhartiya Janta Party)  as part of the NDA (National Democratic Alliance), broke away when the BJP (the leader of the alliance) chose Modi as the leader and thence putative PM in the General Election of 2014. This killed Nitish’s hope of leading the NDA and becoming Prime Minister. He then combined with his former chief enemy Lalu Yadav of the RJD (Rashtriya Jamta Dal) and an emasculated Congress party to form a Grand Alliance to fight Modi’s BJP in the Bihar election.

Surjit Bhalla (formerly at the World Bank who runs a hedge fund in Delhi and is also a psephologist) predicted in his weekly column in the Indian Express that the NDA would win 60 seats and the Grand Coalition 175 seats.(The final result was NDA 58, Grand Alliance 178). His analysis was based on the effects of a multi cornered fight in the general election becoming a two- way fight in the state election, and incorporating a historical trend in Indian elections since 1980, that in the first two years post a Lok Sabha election, the winning party loses 6% of the vote share. The NDA could only win if there was a 4% swing in its favor compared to the last state election in 2010.

Knowing this arithmetic, and hoping to generate the needed swing, the BJP created an alternative coalition to include the extremely backward castes (EBC), of which Modi himself is a member, and also hoped to divide the caste coalitions of the other backward castes (OBC’s) which they had succeeded in doing in the national elections in 2014. Pre-election surveys, including that by the reputable Centre for the Study of Developing Countries, showed the likely success of this putative strategy by giving the NDA a head start before the election.

This strategy was sabotaged by, first, the NDA’s EBC allies, who did particularly badly. Second, it failed to break the OBC coalition particularly amongst the Yadavs (a relatively prosperous backward caste) whose leader Lalu Yadav had won three elections by empowering them through reservations (India’s form of affirmative action). He used the remark by the Rasthriya Swamyamsevak Sangh (RSS) chief – the purported ideological godfather of the BJP-that the caste based reservations should be replaced by one’s based on economic deprivation, as seeking to reverse the empowerment of the Yadavs. This consolidated the OBC vote behind the Grand Coalition. Incidentally, this RSS policy is a perfectly rational one which they have consistently advocated to create a casteless India, and which I amongst many others, including the rising neo-middle classes, support.

Modi, and his chief strategist and party president Amit Shah, then sought to counter the damage this had done to their strategy of dividing the backward castes by playing the communal card. They incredibly claimed that the Grand Alliance was planning to transfer some of the reservations of the backward castes to the Muslims, which is constitutionally impossible. Without any success in breaking the OBC coalition, Surjit Bhalla estimates the resulting alienation of the Muslims, constituting 17% of Bihar’s population and twenty percent of whom are estimated to have voted for the NDA in the general election of 2014, only 3% voted for it in the Bihar election. This meant that the voting gap between the Grand Coalition and the NDA which would have been only 2.9% (with 102 seats for the BJP and 125 for the Grand Coalition) instead of the actual 7.8%, if the Muslim vote for the NDA had remained the same as in the 2014 national election.

But, most important it was his development agenda more than caste and religion which won Nitish Kumar- the leader of the Grand Alliance- his third term as Chief Minister. Bihar was and still remains one of the poorest states in India. But, by providing law and order which had deteriorated under his predecessor Lalu Yadav’s 15 year reign, and some basic public goods like roads, houses and rural electrification, Bihar grew at 10%p.a. (admittedly from a low base) under his reign. It witnessed the second largest reduction in poverty, reductions in infant mortality rates, and improvements in education particularly for girls compared to similar states like Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal. But it remains one of the poorest in terms of per capita income and is a laggard in terms of job creation. As the BJP was Nitish’s partner in the ruling NDA which saw this economic progress, it could have shared some of the credit for these achievements if it had nominated Sushil Modi, the former BJP finance minister in Nitish’s cabinet as its Chief Minister designate and the face of the NDA in the election. Instead, Narendra Modi and Amit Shah chose to fight the election projecting the PM and leaving the Chief Minister’s post vacant.

Even this might have worked, as Modi began his campaign by making the election a contest between two models of development: the statist, welfare oriented and atavistic socialist model of Nitish which Modi had castigated in the 2014 election, and the market oriented, private investment led, job creating model from his tenure in Gujarat which he had so successfully sold in the national election. But he soon gave up on this, turning to caste and religion, as it became apparent that given the meagre visible economic results on the ground after his 15 months in office, his model lacked credibility. The contest became one between Modi and Nitish and what they had in fact delivered in terms of the economic progress of Bihar. With the realized gains under Nitish in Bihar, contrasted with the promised and unrealized gains under Modi at the national level, voters preferred to vote for Nitish.

There are a number of consequences from Modi’s resounding defeat in Bihar. The first is that the strategy of waiting to implement reforms until the NDA has won enough state elections to get a majority in the Upper house has been blown. Instead, the BJP will have to learn how to cajole and horse trade with the opposition, as has been the past practice in India, to get its program legislated. The second is that, the NDA will have to nurture and rely on local leaders in state elections, instead of making Modi the chief protagonist. The third is that, it will have to learn, playing the communal card is counterproductive. Finally, and most important Modi will have to learn that, instead of being distracted by frequent state elections, he must concentrate on delivering the requisite reforms to show tangible economic results from his alternative to the tired statist, dirigiste, Nehruvian model. If not, I fear as in Bihar, the purveyors of welfarist dirigisme, united in opposition to the BJP will win, and as in the past, keep India from realizing its economic potential.

Deepak Lal is the James s. Coleman Professor of International Development Studies at UCLA.