Saturday, 16 May 2009

Indian elections 2009

Its the day the results will be declared. The 1 Bn strong jury will of course come out with a split decision. Today we will know exactly what.

There should be no surprises. India will once again be governed by a coalition. In a note we wrote after the Nov 11 attacks in Mumbai we argued that politics in India is multifaceted with "national level" issues having a limited impact on elections and hence creation of governments.

The outrage after the Nov attacks took maybe 80% of Air Time on all news channels, but move away 150Km from the big cities, and people were already too far from Mumbai.

We believe, India votes on three philosophies.

A. The rich, well educated "elite" is largely a cynic. These folks have perhaps the lowest turnout. They don't care (anymore). They believe that any government formed will be just as inefficient. They want business to thrive and their well paying jobs to be secure. "Government, get out of the way" is the motto.

India will not go the socialist way anymore. The performance of the finance and commerce ministries are extremely critical for any government to have a semblance of functioning. Hence, no matter who wins, governments ensure that the F and C ministers will be the best available candidates. That's all the "upwardly mobile" Indian expects from the govenrment. "Get out of my way, make F and C work". The real work will be done by the bureaucrats of the Indian Administrative Service, so most ministers do not matter.

B. Then there is the middle class, which was made of mostly employees of the government sector. These folks, we believe always voted for the Indian National Congress, but found a choice with the emerging right wing Bharatiya Janata Party (BJP). The middle class voter (the ones we have known all our lives) rarely ever change their voting habits. It took the BJP many many years to enter the national debate. We do not see a third "national party" anytime soon. So the choice is one or the other.

C. And then , the rural voter. Largely farmers, but more and more people involved in the manufacturing and rural service economy.

These folks, mostly, vote by familiarity. Familiarity of community. There are about 3000 communities in India. Each community is seeking its own voice and this is causing extreme fragmentation of the vote bank at the rural level.

Indeed the two main parties- Congress and the BJP have been facing this vote bank fragmentation not in the cities, but in the rural areas- where community based voting has found a very strong foothold. Promises of more subsidies and fair "representation" of community leaders takes predominance over national level issues.

Caste and community, being seen as easier ways to get elected, means that the current lot of rural politicians does not have to focus on development. Subsidies will do. Perhaps, the trickle down effect- and increasing awareness will change this equation. But it will take time. The "minorities" have only recently found voice (maybe in the past 4 elections), so they will want to cherish if for a while longer, before giving up their interests before broader national issues.

The last Indian government was a coalition of more than 20 parties. We would be surprised if today's results threw up a small coalition.

But if the past 5 years have been any indication, we (of the cynical "government should get out of the way" class) should look forward to some robust growth in the next 5 years.

Ritu and Venkat

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