Globally, a country is called a miracle economy if it attains 7% GDP growth. The latest member of the 7% growth club is, surprisingly, Uttar Pradesh. This should matter in the coming state election.
UP has long been regarded as incurably feudal, caste-bound and incapable of fast growth. With a population of 200 million, it has dragged down the rest of India. A standard old joke had Nehru telling Jinnah: \”You can have Kashmir provided you take UP as well.\”
Today, politicians and journalists are analyzing UP election prospects largely in terms of caste and religious combinations. They also look at corruption charges, and Mayawati\’s populist proposal to divide UP into four new states. They don\’t think economic growth matters.
That could be an error. In the bad old days, promises of economic development were bad jokes, since the state remained an economic laggard. Far more important were caste-based and religion-based reservations in government jobs and educational establishments. Nobody knew or cared about state GDP.
Yet that proved to be a mistake in the last election in Bihar, where too growth was once viewed as an irrelevant joke. When this column broke the news in early 2010 that Bihar had suddenly started growing at 11% under Nitish Kumar, it was greeted with scorn. One grey eminence declared that the growth data were not statistically significant. However, they turned out to be electorally very significant indeed — Nitish Kumar won by a landslide in the state election later that year.
One of the most welcome surprises of the last decade has been the sudden acceleration of GDP in many big backward states that earlier pulled down the rest of India. The Planning Commission estimates that between 2004-05 and 2010-11, Bihar averaged 10.9% growth, Chhattisgarh 9.45%, Orissa 9.47% and Uttar Pradesh 7.01%. In three of these states — Bihar, Orissa and Chhattisgarh, the chief ministers were re-elected. Mayawati must be hoping that she can do the same, although UP lags well behind the other three in growth.
It would be quite wrong to draw any automatic connection between growth and electoral success. The DMK in Tamil Nadu and Left front in Kerala presided over rapid GDP growth too, but were voted out in state elections in 2011. Meanwhile, Assam registered miserable GDP growth, yet Tarun Gogoi was re-elected (thanks largely to his peace accord with Ulfa).
So, growth is only one of many factors. But the same can be said of caste and reservations too. After all, Uttar Pradesh has had the same caste composition for decades, yet parties of all stripes have come to power in the last two decades.
Arvind Virmani, former chief economic advisor, has created an economic model to try and explain electoral trends. This model posits that when growth of GDP per capita is faster in the last five years than the preceding five years, the incumbent will have a better chance of getting re-elected. Conversely, a worsening of the growth rate reduces re-election chances.
This model has had a reasonable, though by no means infallible, track record in the last decade. India\’s GDP growth slowed between 1997-98 and 2002-03 (because of the Asian financial crisis, global recession and two droughts). In consequence, three-quarters of incumbents lost elections in the early and mid-2000s. The NDA government in 2004 claimed to have created a shining India, yet per capita GDP growth during NDA\’s tenure was only 3.8% per year against 4.7% in the previous five years. It lost, as predicted by the model. Subsequently, per capita GDP accelerated under UPA-I. It duly won re-election in 2009. Many other incumbent governments won in states with accelerating growth.
In Uttar Pradesh, the first four years of Mayawati\’s rule yielded per capita GDP growth averaging 4.8% per year. This was twice as high as the 2.3% in the preceding five years (2002-07). This may not be conclusive, but is surely relevant.
Sceptics say that statistics in UP are notoriously unreliable. Few people can sense any sort of economic miracle. Industrialists complain of massive power shortages and government extortion. Road building and real estate have boomed, but corruption is massive. Mayawati has jailed many Yadav goons, but let loose her own. Brahmins who flocked to her in 2007 are now attracted to Rahul Gandhi.
These are the critical issues, say political analysts, not GDP. Maybe. But in a four-cornered contest, tiny factors can swing the vote, and growth is more than tiny. Analysts believe Mayawati is currently well behind the Samajwadi Party, with the Congress and BJP fighting for third place. But if she comes out on top —a big if—7% growth will be the clinching factor.