India: Local interests will complicate national elections

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Between today, Monday April 7 and Monday May 12, more than 800 million Indians will go to the polls to elect India’s 16th Lok Sabha, the lower house of the country’s parliament. The vote, possibly the largest democratic event in history, comes at a critical time in the country. India faces declining economic growth, as well as rising militant threats from a weakened Pakistan and a post-NATO Afghanistan. At the same time, India is beginning to re-engage its periphery and re-evaluate its relationships with two global powers, China and the United States.

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Two parties dominate India’s political landscape: the Bharatiya Janata Party, or BJP, and the Indian National Congress. The BJP’s prime minister candidate is Narendra Modi, a controversial pro-business Hindu nationalist who currently serves as chief minister of the economically vibrant Gujarat state. Congress, on the other hand, is semi-socialist and one of the world’s oldest political parties, currently in its fourth generation of Gandhi family leadership. India’s elections, especially the potential for a Modi victory, will be watched with an eye toward reform. Regardless of the outcome of the elections and the subsequent coalition building, India’s next leader—even if it is the charismatic and dedicated Modi—will see any initiatives constrained by the considerable inertia of India’s geopolitical realities.

India’s ongoing economic trouble is the main electoral issue. Several months of declining foreign investment and a fluctuating rupee have exacerbated slowing economic growth over the past year — a jarring shift after a decade of economic dynamism. Although the Indian stock market and currency stabilized somewhat in March, indicators regarding the health of the country’s steel, automobile and infrastructure sectors portend an extended slow period, belying the current Congress-led government’s claims that the problems are temporary.

India’s new government will also need to react to challenges and opportunities beyond its borders. The NATO withdrawal from Afghanistan at the end of 2014 and a weak Pakistan will generate increased threats to Indian security. Meanwhile, India’s relationships are evolving with Bangladesh and Sri Lanka, two peripheral nations important to India’s imperative to dominate the self-contained subcontinent. This comes as India confronts diplomatic challenges with the United States and China. At the same time, New Delhi’s dependence on imported energy may be mitigated by the US-Iran rapprochement, which could lead to energy deals and investment opportunities.

Narendra Modi and Gujarat-style reform
Modi’s rapid rise to national prominence began in 2001, when he became chief minister of Gujarat state and helped transform its largest city, Ahmedabad, into a key driver of Indian economic growth. His supporters credit him with overcoming India’s sluggish bureaucracy and endemic public opposition to rapid development. Gujarat’s coastline now boasts some of the most advanced container ports on the subcontinent. The state has also become a vital node for Indian refining and power generation. Modi has managed to increase Gujarat’s internal power generation as well, promoting renewable sources such as wind and solar.

Gujarat’s economic vitality is an exception in India, where institutional inertia makes it difficult to implement reforms or meet even basic power needs. Because of this, Modi’s record has the domestic and international business communities hoping to see him expand his administrative reach from Gujarat to all of India.

But Modi is a polarizing figure. His reputation was tarnished by Gujarat’s 2002 Hindu-Muslim riots, which killed at least 1,000 people, most of them Muslims. Critics in India and abroad have faulted Modi for failing to stop the violence, and some have even accused him of supporting the Hindu rioters. Others question Modi’s economic track record. While Gujarat’s urban elite and middle classes have become increasingly prosperous, rural communities have stagnated, especially indigenous groups and members of the Dalit caste, commonly known as untouchables. In terms of its overall human development index, Gujarat ranks toward the bottom of India’s middle development states and barely above the national average.

The art of coalition making
India’s 28 states (soon to be joined by Telangana) and additional union territories present a degree of ethnic, sectarian, linguistic and demographic diversity that rivals sub-Saharan Africa. The upcoming elections will reflect these startling contrasts. There will be 930,000 polling stations. Some, in cities like Delhi and Mumbai, will serve hundreds of thousands of voters. Others, in remote regions such as Arunachal Pradesh, are expected to serve fewer than 10.

Local politics in India have taken on increasing importance in recent years. Both Congress and the BJP have powerful political machines and media outlets at their disposal, masking the parties’ increasing struggle with factional interests. The BJP and Congress once functioned as a secure duopoly, but they now must knit together coalitions of rising local parties. Issues that were once marginal, such as Telangana statehood or Tamil views on Sri Lanka, are increasingly becoming matters of national importance.

Congress’ two recent terms have shown the limitations and the tenacity of its United Progressive Alliance coalition. It lost the support of West Bengal’s All India Trinamool Congress, which is now a political opponent. Rising political forces such as Tamil Nadu state’s Dravidian parties now demand more for their vital support. But Congress can still count on a wide voter base among diverse communities because of the party’s inclusive policies and social welfare focus. The BJP has gained the support of Muslims in some areas, but its ability to mobilize diverse factions is not on par with that of Congress.

The BJP also lacks Congress’ internal cohesion. Modi’s nomination was controversial and led to a number of splits and internal disputes. Over the past year, the BJP has taken the lead in polls, buoyed by investor and business hopes for economic revitalization and strong central governance. But this does not guarantee a BJP victory. In both 2004 and 2009, the BJP held leads before Congress ultimately prevailed at the polls. Currently, it appears that this year’s race will again be close, and the winning party—whether Congress or the BJP—may have a modest plurality of votes but not a majority.

Factional barriers to reform
India’s regional interests will make it difficult for any coalition to implement a coherent national policy. Much of India’s rural population of nearly 800 million is poor and dependent on subsistence farming, which relies on state subsidies for food and grain, water and agricultural inputs such as fertilizer. Local and regional political machines mobilize large numbers of voters from these communities, giving rural Indians significant leverage over state and national governments. Strikes and protests have impeded development of energy and mineral resources, as well as construction and infrastructure initiatives such as a steel mill in Odisha funded by South Korea’s POSCO.

Thus, it is inherently difficult for New Delhi to reform from the top. Modi has promised pro-growth policies such as raising fuel prices and increasing natural gas returns for private producers, but he will face difficulties unless he offers opponents some sort of trade-off. When the BJP last held power between 1998 and 2004, it tried to implement the “Shining India” program, a version of trickle-down economics. But the initiative sparked opposition from the poor and contributed to Congress victories in 2004 and 2009. Congress, too, has attempted economic and financial reform through special arrangements with factional interests, including support for Telangana statehood and a grain subsidy scheme.

The growing power of anti-system political movements will also challenge New Delhi’s rule, particularly Modi’s style of strong central governance. India’s militant Maoist Naxalite movement, for example, is gaining political ground in parts of southeastern and south-central India. Islamist militants, including the Indian Mujahideen, also view Modi with special enmity because of his association with the 2002 Gujarat riots.

India’s rising anti-incumbency movement
Both the BJP and Congress will need to deal with increasingly unwieldy coalitions, but the upcoming elections will also feature local parties that present a challenge on a national scale. Local interests have long called for a “Third Front” alliance to operate outside of the two major parties. This has been hard to achieve. Without the organizational and political capabilities of the larger parties, the parliament’s smaller groups have been unable to overcome their natural divisions.

But smaller parties such as Aam Aadmi Party and the All India Trinamool Congress will compete at the national level in the coming elections. They hope to capitalize on public frustration with Congress’ handling of the economy, regional pressure from China and skepticism about Modi’s ability to change the system.

Republishing by The Manila Times of this analysis is with the express permission of STRATFOR.

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