It was the politics, stupid

The markets are on fire following the victory of the BJP. Optimism is in the air. People are again talking of a return to a growth rate of 7-8% after the 5% growth rate of the last three years. This has led commentators to conclude that it is the economic downturn plus high inflation spelt doom for the UPA in the recent elections.

As readers of this blog would know, I have argued that the UPA's economic performance was not bad at all and that its record of growth with equity is impressive. A British academic, writing in the Indian Express, corroborates this view with a focus on how real incomes improved in the rural areas:

They (the NCAER and a team from the University of Maryland) surveyed just under 42,000 households across India in 2011-12, a massive sample. Crucially, these were the same households that they had surveyed in 2004-05, so they could track changes that were experienced over the first seven years of UPA rule.

The study found that real average household incomes in rural areas had increased by 5 per cent annually, which was almost twice the increase of 2.6 per cent in towns and cities.
When they adjusted their calculations using the numbers of members of households, the growth of incomes in rural India was even more impressive: an annual average of 7.2 per cent. So the UPA’s policies clearly helped to make growth “inclusive” in terms of the rural/ urban divide.
What about poor people? The researchers separated respondents to their survey into several social groups. They then calculated changes in per capita household incomes for each one. The most prosperous group, “high caste Hindus”, gained less than all of the other groups. The table tells the story.

So, it's hard to ascribe the UPA's failure to economic outcomes in terms of improvement in real incomes of the masses. It could well be that the failure to deliver on other expectations- electricity, roads, water- and popular expectations in respect of these made a difference. However, it is the political factors, the writer suggests, that really mattered. It may not have been corruption, as the writer thinks, as much as the appeal of Modi's leadership and of Hindutva, as I have argued in an earlier post.