Boom & Not-So-Boom Cycle

Tepid economic growth tarnishes Akhilesh Yadav\’s chances in Uttar Pradesh
A million words have already been written analysing the coming state election in Ut tar Pradesh. Most analyses have been based on personal visits, interviews, anecdotes and caste arithmetic. This column aims to analyse the election through the lens of economic growth.This approach has obvious limitations. GDP is not the only determinant of political outcomes. But for what it is worth, this approach suggests that the BJP has a good chance of ousting the Samajwadi Party .

Anti-incumbency has always been strong in this poorly governed and relatively slow-growing state.GDP growth under Akhilesh Yadav has been slower than under Mayawati (see table). A study by the ET Research Bureau some years ago suggested that if GDP growth slows down under a new government, then twothirds of such governments get voted out. This significant, though not infallible, indicator favours the BJP in UP .

Historically , winning elections had little to do with economic development and a lot to do with combining or breaking with sundry castes and votebanks to form a winning coalition -what Congress veteran Digvijaya Singh called `jod-tod\’ (joinbreak). They were also influenced to some extent by local issues such as scams, droughts, social conflicts, subsidies and giveaways. But in the last decade, several CMs have won repeatedly by stressing development that yielded rapid economic growth. Examples are Nitish Kumar in Bihar, Naveen Patnaik in Odisha, Manik Sarkar in Tripura, Shivraj Chouhan in Madhya Pradesh and Raman Singh in Chhattisgarh. These chief ministers also played games with votebanks and freebies, but their victories were based overwhelmingly on policies stoking fast growth.

Why does fast growth matter more now? Because `fast\’ today means more than twice the speed during the bad old days of the Hindu rate of growth, when even the fastest states barely crossed 5%. Economic reforms in 1991 helped accelerate growth, but the immediate beneficiaries were the advanced states, which were best placed to take advantage of the slashing of red tape.

Roads: Pothole Connectors

The poor states, contemptuously called Bimarou -Bihar, Madhya Pradesh, Rajasthan, Odisha and UP -did not accelerate much in the 1990s.Indeed, Bihar\’s chief minister Lalu Prasad Yadav opposed fast growth, which he thought benefited mainly the upper castes.

He won three elections in a row by ignoring development in favour of caste war, humiliating the upper castes while raising the dignity , status and extralegal clout of the backward castes and Muslims. When asked why Lalu neglected roads, he famously replied, “If I build a road, whose car will run on it, and whose buffalo will the car kill?“ Greater dignity won Lalu three elections. But then voters wanted other things. Nitish Kumar came to power in 2005 promising to end Lalu\’s `jungle raj\’ and restore livelihoods ruined by the goonda-filled slowgrowth era of Lalu. By jailing gangs ters, restoring confidence in economic activity and building roads as never before, Kumar accelerated GDP growth in Bihar to an average of 8% per year. Ignoring the droughthit first year of that term, average growth in the remaining four years was as high as 10.4%.

He won again in 2015, focusing this time on rural electrification. In this term, GDP growth averaged 10.9%, well above the all-India average. This time, he was also aided hugely by an alliance with Lalu and the Congress.

How does this compare with outcomes in the neighbouring state of Uttar Pradesh? In Mayawati\’s first term (2007-12), GDP growth averaged 6.87%. This was far slower than in Nitish\’s Bihar, but nevertheless an improvement on earlier trends. This owed something to record all-India growth as well as her taming of Samajwadi Party goons.

But she never paid the attention to economic development that Nitish did, never achieved the same growth rates, gained a reputation for high corruption, and so was defeated in the 2012 state election.

Akhilesh Yadav is credited with substantial development efforts in Uttar Pradesh in his term, especially in roads and electricity . Yet, the average GDP growth rate in his first four years in office was only 5.96%, below Mayawati\’s average and nowhere near Nitish\’s average.

We do not yet have data for his final year. But the state would have been hit adversely by demonetisation. He can try blaming the BJP for this. But a Times Now poll in the state suggested that 64% of voters thought demonetisation was a correct policy .

What Goes UP Comes Down

Some caution is required in interpreting these statistics. The Central Statistical Organisation (CSO) periodically changes its reference year for growth data taking into account recent changes in economic structure. For a long-time series, one has to go back to the old CSO series with the base year 2004-05. This yields data till 2014-15. A new series based on 2011-12 gives data from 2012-13 onwards.

This column uses the old series until 2014-15 and the new series for 2015-16. This patching may distort the calculations slightly. The new series also yields much less impressive figures for Bihar than the old series.With all these caveats, the statistical picture goes against Akhilesh Yadav.

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