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10 Economic and Political Lessons from BJP's 5:0 Washout

Dec 12, 2018

Vivek Kaul

The Bhartiya Janata Party's election juggernaut has taken a beating.

The party has lost the state assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh, three states where it was the governing party.

In two other states Telangana and Mizoram, it has been routed.

There are economic and political lessons from this defeat of the Bhartiya Janata Party (BJP), which seemed invincible up until now. Let's look at these pointwise.

1) The Congress is now the biggest party in five relatively large states; Karnataka, Punjab, Rajasthan, Chhattisgarh and Madhya Pradesh. So, Congress-Mukt Bharat is no longer a reality.

The one thing that this will do is that it will make raising money easier for the party. In the Congress model of raising money, the chief minister of a state has always played an important part.

Money has been a reason for worry for the party during a time when the BJP has managed to raise a huge amount of money to fight elections. In fact, in 2017-2018, the BJP got nearly 95% of the electoral bonds issued to finance political parties.

Hopefully, with governments in three more states, the Congress will manage to raise enough money to take on the 2019 BJP election juggernaut.

2) The Congress win in the three states will also make businessmen who are typically large donors to political parties, loosen their purse strings more towards India's grand old party. Political donations made by Indian businessmen are rarely ideological. Businessmen in India like parties which have a good chance at winning and with this performance the Congress is in a much better position to fight 2019 Lok Sabha elections, than it was in 2014.

3) In fact, signs of a change are clearly visible with a few businessmen now coming out openly against demonetisation. These are clear signs of them trying to hedge their bets.

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4) The rattled BJP leaders are now telling us that the state government elections are not a vote on the central government and Narendra Modi. I would have bought this logic to some extent pre-2014. But BJP fights every election around Modi. Even in municipal elections, people have been asked to vote for the BJP in Modi's name. When the party wins elections, the leaders waste no time in attributing it to the magic of Modi. Hence, logically, when they have lost three state assembly elections, it is safe to say that some sheen has been taken off brand Modi.

5) With these wins, the Congress Party has shown that it still has very strong regional leaders, who can get their act together and take on the BJP. What this does at the national will be very interesting. The Bahujan Samaj Party (BSP) decided to go on its own and not align with the Congress in Madhya Pradesh and Chhattisgarh.

Other than the CBI pressure, it is said that Mayawati, the leader of the BSP, did not have enough confidence in the ability of the Congress to win. The election results should clearly turn that logic around.

While BSP going alone did not matter in Chhattisgarh, what's happened in Madhya Pradesh is fascinating. As I write this on the morning of December 12, results for all the 230 assembly seats in Madhya Pradesh have come in. BJP has got 41% of the votes and has won 109 seats. The Congress has got 40.9% though it has won 114 seats. The BSP has one two seats.

India follows a first part the post system when it comes to elections. In this scenario, the concentration of votes becomes very important than total votes that a party gets. Clearly, the Congress votes where more concentrated in Madhya Pradesh than that of the BJP. Hence, the Party won more seats. Now add to this the fact that BSP got 5% of the votes, the dynamic gets even more interesting.

6) The election results are also a clear indicator of the fact that the problem of agriculture distress and unemployment is for real. It also tells us very clearly that demonetisation hit people hard and even two years later the informal sector and agriculture are still suffering from it. One theory going around is that many people in urban India working in informal sectors who lost their jobs in the aftermath of demonetisation and a badly implemented GST, went back to their villages. In the villages, the Mahatma Gandhi National Rural Employment Guarantee Scheme, could not take on the load of these additional workers.

Hence, the elections results can also be said to be the people's revenge of demonetisation.

The sooner the Modi led BJP comes around to these realities the better it is. In fact, it should start with first acknowledging that the problem of unemployment exists, instead of trying to tell the nation on almost every occasion that there is no unemployment problem.

As I often say, the first step towards solving a problem is to acknowledge that it exists.

7) Also, the country will see more socialism in the months running up to the 2019 Lok Sabha elections. Both the BJP and the Congress will try and promise loan waivers and a whole host of other freebies. This is a given.

In BJP's case what helps is the fact that it's currently governing the country. Also, the government has managed to install a friendly governor in Shaktikanta Das at the Reserve Bank of India and attempts will be made to get hold of the mammoth reserves of the central bank.

8) It is worth remembering here that Narendra Modi has never lost an election he has fought. A good reason for that lay in the fact that urban Gujarat continued to remain his bastion. Even in the last state assembly elections in Gujarat, the urban areas came in support of the BJP, when the party was clearly on a weak wicket in the state.

Nevertheless, it is worth remembering that the kind of polarization that works in large parts of urban Gujarat and perhaps in Uttar Pradesh as well, doesn't necessarily go down well with everyone else across the country.

While the mandir might be an issue for some, and hence, politically it makes sense for the BJP to keep raising it, but it cannot be their main issue.

In 2014, Narendra Modi sold a dream. A message of hope. The problem is the promised acche din never really came because the government became more active in perception management than real management required to bring around the promised acche din.

Given this, the BJP now seems to have no option but go back to selling fear. The party has kept the mandir issue alive for nearly three decades, but like pretty much everything else in life, the law of diminishing marginal utility seems to be catching up here as well.

The problem is that god comes into the equation only when there is enough to eat and something to do. Or as someone told Rajdeep Sardesai in Madhya Pradesh, pehle naashta phir aastha (first breakfast then comes faith).

This is something that the BJP leaders need to understand. They clearly need a new narrative.

Also, all the stuff about the prime minister working 18 hours a day now sounds quite tacky. If there is very little change on the ground, the question to be asked is what is the prime minister doing for 18 hours? It's time the prime minister sleeps a little more. India needs a well-rested prime minister, who realises that lowering the level of the discourse doesn't really help.

9) It is important that the Congress does not lose the plot from here, even though it has emerged as the single largest party in three states in the Hindi heartland. The party is more or less absent in the two states of Uttar Pradesh and Bihar, which send 120 members to the Lok Sabha. While the party has a great equation with Lalu Prasad Yadav's Rashtriya Janata Dal in Bihar, the same cannot be said about its equation with the two main parties (other than the BJP) in Uttar Pradesh, which are the BSP and the Samajwadi Party. Yesterday's win will open the doors for an alliance in Uttar Pradesh, slightly more.

10) The only way to take on the politics of Amit Shah and Modi is to be a politician 24x7. While Rahul Gandhi seems to be getting there, he is not yet fully there. The sooner he gets there, the better it will be for him, the Congress and the index of opposition unity.


Vivek Kaul
Vivek Kaul
Editor, Vivek Kaul Publishing

PS: Now you can follow Vivek Kaul on Social Media and get Vivek's updates on the critical issues affecting the economy and your wallet... as they happen. Follow Vivek on FacebookTwitter, and Google+.

Vivek Kaul is the Editor of the Diary. He is the author of the Easy Money trilogy. The books were bestsellers on Amazon. His latest book is India's Big Government - The Intrusive State and How It is Hurting Us.

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25 Responses to "10 Economic and Political Lessons from BJP's 5:0 Washout"


Jan 9, 2019

It may be your wishful thinking, but congress can't get majority in 2019 elections. People of India have always voted differently in assembly and Lok Sabha elections. Congress may improve their tally from 2014, but forming a govt? Tall order.



Jan 9, 2019

India badly require good and honest politicians. As per report many politicians fight for their prosperity, making citizens suffer due to poverty. B S GANESH



Jan 8, 2019




Jan 8, 2019

being a regular reader of your blogs,surprised to see you batting for congress one which is the most corrupt in India. Now on wards i have think twice about your about the facts you are presenting in your articles.


Saumil Parikh

Dec 18, 2018

Totally one-sided analysis. Wisdom of the author becomes questionable is he blindly supports the most corrupt and dangerous party. What could be his analysis prior to 2014 election?

Like (3)

RK Sangha

Dec 17, 2018

Agree 100%. Sharing this on my social media accounts

Like (2)

M.P. Singh

Dec 16, 2018

Very biased view. You are batting for corrupt congress. I am a regular reader of your blogs. Barring one or two, your writing is always anti govt. Looks like you have a personal grouse against our PM.

Like (2)


Dec 15, 2018

Too much of staying awake can cause delirium and make the person take illogical decisions and blabber too much. I worry about the 18 hour work day wreaking havoc on the mental condition of the prime minister. He needs to rest well so that he doesnt come out with his hare brained ideas like demonetisation regularly.

Like (2)

srinivas papolu

Dec 14, 2018

Clearly a biased article.

Like (1)

subhash chandra

Dec 13, 2018

You said that congress has very strong regional leaders? can you name one leader in whole of congress? please exclude sycophants!!!

Like (2)
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