Over the course of next 12 months, India is expected to hold its next round of General Election to elect new Central / Federal Government. Prime Minister Modi won majority mandate in 2014 election and since then BJP has expanded its rule in and now has Government in 22 states. Election schedule and cycle in India is bit complicated. I had tried to take stab at explaining it in earlier post. Grapevine on social media indicates 2019 could be one of the most important elections in India’s history. To an extent, I agree with this assessment.

In order to form the next Government, party / coalition would need to win 273 of 543 seats in Lok Sabha (lower house of the parliament). Interesting thing is for BJP led NDA to form this Government, BJP would need to win 200 seats and then allies would contribute remaining. On the other hand, for Congress led UPA to come back to power, Congress just needs to win 100 seats and “like minded” allies would contribute remaining. This difference in number is a really fascinating story and topic for a separate discussion.

It’s often said “week is long time in politics”. By that yardstick year is an eternity. Considering elections are almost a year away, its too early to predict who would be the next Prime Minister. However Prime Minister Modi is a favourite to return to power. Predicting and analysing elections in India is not an easy task. There are lot of different factors that contribute to ultimate outcome. Even voter turnout plays a massive role and impacts arithmetic. Economic factors like job market and inflation would play a huge role. Then there are other factors like caste equations and alliance dynamics would have a say in final result.

One fascinating aspect in India is always about urban rural divide. According to 2011 census, around 70% of India’s population resides in rural areas (this urban – rural divide is often called as Urban India v/s Rural Bharat). Primary occupation of Rural Bharat’s population is agriculture. As a result, every single party claims to represent farmer’s interests. This rural population could be one of the most important factors that may decide outcome of 2019 elections. Urban middle classes and small business owners have been traditional BJP vote bank. However, perception that’s been created is BJP Government has done nothing for this constituency. This is not completely true. BJP Government has done lot of good work that has helped middle class directly and indirectly. An overview of benefits that middle class got has been explained in an earlier post.

Over last 4 years, Modi government like its predecessors have done significant allocation for Rural Bharat’s development. One major difference that’s seen this time around is there are actually results being seen rather than money disappearing into pockets of middlemen and politicians rather than actual beneficiary. Lot of this last mile delivery to actual beneficiary has been achieved by digitization. Thanks to Jan Dhan Bank Account scheme, nearly 300 million families have now been part of formal banking system. This along with linking of Aadhar and Mobile to Bank account has ensured, money intended for beneficiary directly goes into their own account. It has ensured, middlemen and local politicians are out of the loop and has put end to massive corruption. As a result of this massive rural focus, significant portion of Rural Bharat’s (70% of countries population) has now got access to some of the basic things that are taken granted by Urban India (30% of countries population). Here are some of the details of these efforts –

  • In 2014, when Modi Government took office, there were around 18,450 villages didn’t have electricity. As of February 2018, out of those nearly 16,000 villages have electricity. One of the villages that got electricity recently is Elephanta Island. This area is major tourist hub due to 1500 years old caves. It’s located about 15 KM from Mumbai. But it took 70 years for villagers to get electricity.
  • Along with Electrification, Modi Government started a scheme for Power Distribution companies. Most of these companies are under control of respective state governments. Thanks to good politics and bad economics, these Power Distribution Companies were in very bad financial state. Under the UDAY scheme debts of Power Distribution Companies have been restructured and they are bonds issued against them. In 2017 22 states who were part of this scheme saved more than 7,200 cores rupees (INR 72 Billion / $ 1.11 Billion) on interest cost. This money has been re-allocated for other projects.
  • Ujjwala Yojana has allowed nearly 80 Million poor families to have LPG connection for first time. This needs to be seen in conjunction with LPG subsidiary Direct Bank Account Transfer. As a result, beneficiaries have got twin benefit of LPG connection and subsidiary.
  • Pradhan Mantri Gramin Awaas Yojana is going to provide financial assistance of up to 75,000 rupees ($ 1,100) for construction of house. This is part of ambitious project to have housing for everybody by 2022.

I think Prime Minister Modi and BJP has done right thing by focusing on Rural Bharat. In India’s interest it’s important Rural Bharat develops. This would reduce population migration from Rural Bharat to Urban India. Reduction in population migration would reduce strain on Urban India’s infrastructure. In long run this focus on Rural Bharat would help sustained innovation in agriculture and ultimately the overall economy. Politically it’s also important to focus on Rural Bharat for following reasons –

  • Population of Rural Bharat accounts for nearly 70%. Mathematically speaking, no political party would be able to form a Government without support of this section of society. The sustained focus on Rural Bharat is going to help BJP to get benefits for not only 2019 elections but for years to come.
  • Urban Voters generally tend to vote based on multiple factors. They have their own focus areas and requirements. At times this section demands a lot and no matter how much Government of the day delivers it’s never enough to keep them happy!
  • Politically and perception wise, no Government can concentrate majority on Urban India’s development and neglect Rural Bharat. During early days of IT revolution, Andhra Pradesh (undivided at that time) Chief Minister N. Chandra Babu Naidu spent majority of his resources on development of Hyderabad. This has developed Hyderabad as world class city.
  • Flip side of his Hyderabad only focus and neglect towards rural Andhra resulted in him being called as Chief Minister of Hyderabad rather than Chief Minister of Andhra. Combination of this tag and bad monsoon resulted in distress in rural Andhra and during next assembly elections N. Chandra Babu Naidu was voted out.

There are certain elements that Modi Government has concentrated that has helped both Urban India and Rural Bharat. Infrastructure Development is one of the top performing ministries in Modi Government. In 2017 – 2018 financial year, India constructed record 10,000 KM of highways. To put this in perspective on an average nearly 27.5 KM road construction happened every day. When Government took office in 2014, average road construction was at 8 KM per day. Government has also launched a scheme to make air travel cheaper by starting development of regional airports. Both these efforts are going to boost tourism and help middle class across the country to have affordable and effective options for their travels.

Passage of Bankruptcy Code has set the wheels for beginning of end of crony capitalism. Thanks to new law, Banks have recovered nearly 50% of 9 Lakh Crores Rupees (9 Trillion Rupees or $138 Billion). Proceedings for recovery for next set of Non-Performing Assets (NPA) are starting. Since of majority of these NPAs belong to Public Sector Banks, this money would go into Government coffers.

Part of the problem Modi Government has is about perception. Thanks to historic mandate people were expecting things to change at much faster pace than they have. Politically Prime Minister Modi had mandate to dismantle Congress’s ecosystem. He has not done that either by choice or compulsion. This has resulted in subset of BJP’s support base disappointed. How much that costs BJP in next cycle of election needs to be seen. The big question that everybody wants an answer to is, would Good Work done by Government suffice to help it win another term in office. If Modi Government wins another term based on performance rather than caste-based politics, then it would usher a new era for both Urban India and Rural Bharat for sure….

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