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Electing reforms PDF Print E-mail
Tuesday, 21 October 2014 00:00
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Once again, voters plump for development agenda

If the Lok Sabha elections were the first sign that Indian voters were in favour of a development agenda as opposed to narrow caste-based considerations, last week’s assembly elections in Maharashtra and Haryana reinforce that message; more so given that national and local elections don’t always go the same way. In Haryana, where the BJP has never come to power alone, it swept the 90-member assembly with 47 seats—its previous best was 5. In Maharashtra, the BJP nearly trebled its 2009 performance and got just 22 short of an absolute majority in the state. While the voters in Haryana ditched their caste confines in favour of a government with a clean image and a development track record, in Maharashtra, voters snubbed the Shiv Sena’s Maharashtra-for-Maharashtrians agenda. Indeed, Raj Thackeray’s breakaway MNS, which was even more Marathi manoos, than Uddhav’s Shiv Sena, won just one seat. Ironic that, had the Shiv Sena not got into a seat-sharing fight with the BJP—which BJP President Amit Shah reinforced when he said it was the Shiv Sena that broke the alliance, not the BJP—this is something that would have remained untested.

While the government has already used the political space provided—a day before the results were declared—to push through some welcome reform on freeing up diesel prices and proceeding towards using direct benefit transfers on LPG (the gas price hike was a bit of a washout since vital details have not yet been announced), the win means a lot more can be expected; which is why markets rose 321 points the day after the election results were announced. Some of India’s top-performing states—Maharashtra and Gujarat—are now BJP-ruled and that will go a long way in pushing through economic reforms; more so since the real action is in the states. Rajasthan has already shown the way in terms of labour reforms, but the state is low on the priority list for investors—imagine the impact if both Gujarat and Maharashtra were to announce something similar. Though each state has its own concerns on GST, and just because it is a BJP state doesn’t mean it will automatically fall in line, this will surely facilitate the process of introducing GST as there will no longer be any opposition for the sake of opposition. Given how President’s rule allowed the BJP to push on mandi reform in Delhi, it can be expected that Vashi’s monopoly in Mumbai will also soon be dismantled. The other issue, as Credit Suisse economist Neelkanth Mishra points out, since sales tax and labour inspectors and the police are all state government employees, winning more states puts the BJP in a better position to tackle this. The DMICDC states, where the big burst of city development is expected to take place, similarly, are all controlled by the BJP. All in all, the development augurs well for India’s reforms process.

 

 
 

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