Making sense of the culture of giving pre-election gifts
The Punjab electorate voted for the Aam Aadmi Party (AAP) in part because they found the Delhi-based party more credible than the other two parties that had ruled the state for decades even as its economy deteriorated. . The “Delhi model”, dictated by the culture of gratuity in a wealthy city-state, cannot be easily financed in heavily indebted Punjab. But that didn’t stop Arvind Kejriwal from making big promises to the electorate, who swallowed them whole.
The four BJP-led states resisted opposition to power as the average voter – especially women – found they had benefited from the social protection programs promised (and widely implemented) by Narendra Modi . Subliminally, the electorate understands that when the ruling parties at state and central levels are the same – the “twin-powered sarkar” – they could deliver more.
The term “credible politician” may seem like an oxymoron, but it is the key to understanding why voters gave decisive mandates and replaced the anti-incumbent tendency perceptible before the turn of the century with the pro-incumbent tendency. What has fundamentally changed in Indian politics is the politician, who now realizes that his chances of being re-elected depend on the visible fulfillment of promises, even if those promises are unaffordable or unsustainable.
The policy of credibility is built on the sand of a future tax failure. State finances are already in poor shape due to the economic impact of the pandemic. But that didn’t stop all parties from promising free electricity, free water and cash handouts to women this time around. He will probably be delivered, which explains what is at the basis of this new political “model” – access to power based on promises financed by the public purse. Public service at public expense is the motto, and it helped usher in an era of pro-incumbency.
Looking at the long ruling terms of most political parties in states like West Bengal, Odisha, Gujarat or Rajasthan, Chhattisgarh and Madhya Pradesh (before 2018), and even Tamil Nadu , Kerala, Karnataka and Andhra Pradesh after the bifurcation and Telangana, what we see is continuity of this political pattern rather than change. Where parties alternate in power, the gratuitous political culture remains the same regardless of who wins or loses.
This model was adopted at the Center during the UPA, when the early years of strong growth brought high tax revenues to all governments. But even Modi, who favors empowerment over entitlement, has been forced to adopt this strategy willy-nilly to stay in power. He doesn’t believe in unlimited gifts. But when UP went to the polls in 2017, it looked the other way when the state unit promised farm loan write-offs. This triggered a huge round of state-level loan waivers that totaled over ₹2 lakh crore, rolling back both credit culture and growth.
When Rahul Gandhi proposed his NYAY (Nyuntam Aay Yojana) program of universalizing minimum income for the poor ahead of the 2019 Lok Sabha elections, Modi had no choice but to propose his own Prime Minister Kisan Samman Nidhi, which promises ₹2,000 every four months to each farming household. The pandemic, of course, has made the culture of free almost inevitable.
This is partly why Modi has had to backtrack on agricultural reforms, when the agricultural sector needs them the most. If a sector needs subsidies on every major input (seed, fertilizer, electricity, fuel, water, insurance and credit), with loan waivers on top of that, and the producer still demands a 50% margin on the costs in terms of guaranteed returns, that would be considered an outrage in any industry. But no party is ready to reconsider this model despite its unsustainability.
In India‘s endless electoral cycle, this electoral model is now the norm rather than the exception. This leads us to two conclusions. First, it is now politically possible to finance your own re-election using state resources. You could call it a leveraged majority vote buyout using the assets of the same audience. Second, political stability is “bought” at the cost of creating future economic instability, including high inflation and slower growth caused by insane regulation, especially at the state level.
The proverbial free lunch
These regulations, contrary to conventional wisdom, are not merely quaint relics of the license-permit raj, but a necessary condition for funding future elections through illegal means. If regulation is dismantled quickly, the opportunities for politicians to demand quick money will collapse.
Anti-incumbency is overcome by bad economics. The winner must face the winner’s curse, and the net result is democracy unaffordable for all. The results of the five legislative elections testify to this reality.
A prediction: If the above political model is correct, the BJP has a good chance of winning a third term in Delhi in 2024. The voter will pay their own freebies. Every party knows that now.