How inflation may play out in the 2024 elections
Whether the BJP in 2024 retains its overwhelming majority may well depend on how it tackles the issues of inflation and associated household distress
The most significant political development this year is not the formation of the Indian National Developmental Inclusive Alliance (INDIA), a congregation of forces opposed to the Bharatiya Janata Party (BJP). It isn’t the tentative alliances that the BJP is seeking to build with its older and newer partners. And it isn’t the G20 summit, which is as much a diplomatic event as a political one to symbolise India’s success in the domain of international politics under Prime Minister (PM) Narendra Modi.
The most significant development is persistent inflation.
The BJP is fully aware of the political implications of inflation. From the 1998 state assembly elections, where high onion prices cost the party its government in Delhi, to 2013-14, when inflation was among the factors that contributed to Modi’s triumph, the link between politics and prices in a political economy where food comprises a substantial element of the inflation basket, is quite clear to the party’s managers.
Indeed, in his Independence Day address from the ramparts of Red Fort, even as he pushed forward a narrative of progress and achievements, Modi sneaked in a brief segment on inflation where he acknowledged the problem.
He attributed it to the global climate, with the pandemic and then the war in Ukraine destabilising markets. “Today the world is facing the crisis of inflation. We import some goods from around the world. Unfortunately, we also import inflation.” But then, recognising that this is a widespread concern — Modi was delivering his speech a day after data showed that headline consumer price index had jumped from 4.9% in June to 7.4% in July — he said that India had tried its best to control inflation. “Compared to the past, we have also had some success, but we cannot be complacent with that. We should not be complacent that things here are better than that in the world. I have to take more steps in this direction to minimise the burden of inflation on my countrymen. And we will continue to take that step.”
Inflation has coincided with what many economists believe has been a K-shaped recovery of the economy after the pandemic; the term refers to the phenomena where corporates have seen profit-led growth and the upper middle classes and segments of the middle class have done reasonably well but, simultaneously, there has been a dip in the incomes and living standards of a much greater segment of the population — the poor in rural and urban areas, small farmers, labour in the informal sector, and the lower middle classes.
This, even as major structural issues that have haunted the economy for decades, of persistent unemployment and a manufacturing sector that doesn’t have the base and capacity to accommodate the millions who join the workforce remain. Supplement this with one more factor. In a recent piece for The Indian Express, the economist Jean Drèze convincingly argued that the real wages of male agricultural labourers, non-agricultural labourers and construction workers grew at less than 1% between 2014-15 and 2021-22; he pointed to recent data to suggest that in 2022-2023, the growth rate of real wages for the first group was just 0.2% and that the other two actually saw a decline.
It is in this backdrop that the 2024 campaign will hinge on a variable that neither surveys by pollsters nor reports by journalists have yet been able to unravel. Are the poor in India disillusioned? Or are they angry? Or are they still hopeful? And most importantly, do they blame somebody for this? But while the Opposition may bank on precisely this juncture in the political economy to assume that the voter is angry and, therefore, its prospects are bright in the next elections, recent political and electoral history has shown that it will be committing a grave mistake in underestimating the BJP for four reasons.
One, the party has robust feedback channels and is aware of the ground realities. As the PM’s speech indicated, both economic data from the top as well as organisational feedback from the ground have already equipped the party leadership with the information on prices and how these are affecting the lives of citizens. This is a party that usually doesn’t live in denial; it picks up on feedback and does what it can to address the gaps and vulnerabilities.
Two, the BJP also has State power and, therefore, the ability to effect policy tweaks and push relief measures if it assesses that economic discontent can have political costs. This can take the form of income support, provision of free ration, enhanced subsidies, export bans, and addressing supply chain issues. The fact that the government has a window in the form of executive actions in the next six months, and the vote on account in February, means that it will keep an eye on the data, the markets, global and domestic economic indicators and even deviate from the fiscal path if it concludes that its political survival is at stake.
Three, the BJP’s political toolkit has a bunch of other ingredients, both economic and non-economic, to potentially neutralise the discontent. Go back to 2019. Demonetisation, the haphazard rollout of the Goods and Services Taxes regime, debates about the quantum of minimum support price for farmers, and persistent unemployment had created a climate where it appeared that the BJP was vulnerable. But what most analysts underestimated was the impact of effective welfare measures, delivered on the back of revolutionary changes in the welfare delivery architecture. The provision of money to construct rural homes and toilets, the distribution of gas cylinders, and income support to farmers helped; this time, the BJP will also market its success in the provision of piped water under the Jal Jeevan Mission as well as the provision of food support through the pandemic and beyond.
But there are also the non-economic ingredients at play. How a voter decides who to vote for is probably the toughest question to answer in political science. But it is usually a decision based on multiple factors, including the emotional connect a voter feels with the parties or candidates in the fray. The BJP’s ability to project Modi as a strong and selfless leader, its ability to weave umbrella social coalitions on the ground with a focus on both the dominant and subaltern communities, its majoritarian rhetoric and consistent drilling of a sense of both victory and victimhood among Hindus, and its effective and relentless projection of the Opposition as an incoherent bunch of disparate leaders bound by ambition and corruption have proved to be potent political tools. These will be in play again in 2024.
And finally, the BJP’s organisational networks mean it has a cadre on the ground that divides voters, based on data, into three schools. Those who are with the party are wooed again just to ensure that they will turn out on polling day and the vote is guaranteed. Those who are seen as resolutely opposed to the BJP are left alone, but there are strategies deployed to ensure that this vote is fragmented among rivals. But it is the third category of voters that the party spends most energy on; the swing voters who aren’t necessarily wedded to the party, who may even be disillusioned, but who can be persuaded through a mix of personal outreach, ideological appeal, relief measures, and promises for the future.
A decade is a long time in power. Fatigue is inevitable. When combined with somewhat grim economic indicators that affect a citizen’s kitchen and livelihood, the political climate can get tricky. But the Modi-led BJP, at the moment, with seven months to go before the first phase of polling, remains attuned to the voices on the ground and, therefore, appears to be in a much better position to tackle the political challenge of inflation than its predecessor was in 2014.
