India: When State Elections Matter

Why a State Election Could Impact over a Billion Lives[UPDATED 13 March 2017 4:30 PM EST] Video below. 

The votes have been counted and Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) is the clear winner in Uttar Pradesh, taking 312 of 403 seats. This is the biggest majority for any party in the state since 1980.

Asia analyst Shailesh Kumar has a quick update on what this means for Modi and for his reform agenda.

How big of a boost do the elections in Uttar Pradesh (UP), home to more than 200 million people, provide Prime Minister Modi?

The boost Modi will get from his landslide victory in UP is huge, to say the least. The win itself is helpful given that his party, the Bharitya Janata Party (BJP), has not controlled the state since the early 2000s. But more importantly, this election was seen as a referendum on his decision to cancel high value notes to combat “black money;” otherwise known as demonetization. The message is that voters overwhelmingly support his anti-corruption and economic development agenda, and that he enjoys the backing of Indians across demographic lines. This weekend's outcome establishes Modi as the singularly most important, and popular politician in India.

Will that success carry through to the next national elections?

The outcome of this election positions him very well for the 2019 general election. State and regional parties are looking to increase their national profile, particularly given the decline of the national Congress Party.  There was the potential for these parties to elevate their standing and position their respective leader as an alternative to Modi.  But this election has been a massive setback for them, given the BJP's three-fourths majority in UP. Also, Modi campaigned on an economic development platform in 2014, something opposition parties are now also focusing on.  Yet, in the state election this year, he shifted gears and added a message of anti-corruption, which has proven to be a winning strategy.  Opposition parties cannot challenge him on this front making him it difficult for them to compete with him on this campaign plank.  For these reasons, it is not evident how an opposition that is in tatters will go head to head with Modi in 2019.

If so, can Modi take economic reform in India to another level? Can he get land and/or labor reform?

Anti-corruption and improved governance will be the main focus in the coming months. After all, that's the takeaway from UP.  Yet, anti-corruption policies can also be considered reforms in their own right.  They can boost the economy since business conditions will benefit. Traditional reforms will also progress, but the large structural reforms will be difficult as Modi will still not have a majority in the upper house of parliament.  But all is not lost on that front.  Tax reforms are largely done with a new tax code coming out this year.  Land he tried but gave up on and asked states to carry forward necessary reforms.  Labor is sensitive, but he will look for small tweaks to employment laws that are not too politically sensitive through parliament.  Land and labor are challenging and expend a lot of political capital.  But there are additional reforms that can, and will be pursued now and after 2019.  He will look to implement many of these reforms through executive action, or having his ministries change regulations to enhance the business environment.

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On March 11th, India's most populous state, Uttar Pradesh (UP), will announce the results of its seven-part election to choose a new government. UP sends 80 MPs to parliament, the most of any Indian state, and this election is widely seen as a referendum on Prime Minister Narendra Modi's government.

Eurasia Group Asia analyst Shailesh Kumarunpacks why this election is so important, who the main players are, and what it means for the future of India.

Our quick call: Modi's ruling Bharatiya Janata Party (BJP) will win the election outright or through an alliance with the regional low-caste Bahujan Samaj Party (BSP).

Video and transcript below.
 
[TRANSCRIPT]

India is gearing up for a series of state elections and a lot of people must be wondering why anyone should care about state elections. The reality is state elections matter a lot. In general, because of India's parliamentary system, members of the lower house of parliament are elected through direct elections but members of the upper house are appointed by state assemblies. So if you're a political party in India and you have control of the lower house, and you want to make sure your legislative agenda is cleared through the upper house, you really need to win the state elections.

WHICH STATE MATTERS MOST?

Uttar Pradesh, otherwise known as UP. UP has about 200 million people, making it just about as big as Brazil, and providing a pretty good gauge for Modi's popularity in India right now.

WHO ARE THE CONTENDERS?

There's Modi's BJP, which has not won there since the 1990s; there's the incumbent SP, led by a young and charismatic leader named Akhilesh Yadav; there's the BSP, led by a former chief minister, Mayawati; and then there's the Congress Party, led by Sonia Gandhi and her son Rahul Gandhi.

These elections are going to determine what Modi's agenda is going to be for the next two and a half years he has in office. Is he going to become more focused on anti-corruption and improved governance, something we saw him already begin to do? If he wins, he probably will. Or are we going to see him retrench more towards populism and social conservatism, which the BJP is notorious for? If he loses, that's the likely outcome.

When the dust settles on March 11th, and the votes are counted and we find out who wins, the headlines will likely read whether or not Modi and his anti-corruption efforts that began earlier are popular or not.

WHAT DOES THIS MEAN FOR INDIA'S FUTURE?

Whether the various demographics, the castes and the religions, vote according to party lines or if they break and vote for parties that they haven't voted for before. It's going to tell us a lot about the evolution of the Indian electorate.