Who rules the states, it appears, can also be critical
Economists never tire of claiming that it is economic factors that determine the course of elections. So, the argument is that voters vote for a party that delivers higher economic growth and, as a corollary, vote out a party that delivers sub-par growth. The recent assembly elections are a good example of this. Despite the traditional anti-incumbency factor, the BJP came back to power in both Madhya Pradesh and Chhattisgarh, and it wrested power in Rajasthan—both MP and Chhattisgarh delivered higher growth, especially in agriculture, than the national average in FY13; and Rajasthan delivered a lower number. But how does this analysis explain the Congress getting wiped out in the recent Delhi elections, or the BJP at the national level in 2004?
This is where economists bring in some refinements. In the case of Delhi, both the price rise—definitely an economic factor—and corruption are brought in as explanators. As for 2004, though the 8.1% growth in that year was a high number, some economists have said what matters is the average—and the average for the NDA was lower than it was in the previous 5-year period!
A new study by Arvind Panagariya and Poonam Gupta, printed in Vox this week, brings another perspective to bear. The good: electorates seem to prefer more educated candidates; the bad: the relatively better off candidates tend to win more; the ugly: those with more criminal cases against them tend to do better—it is, though, likely that the last two issues are closely correlated since, logically speaking, those with criminal records should tend to be richer. More interesting, though, is the argument made by the duo, based on their study of the last Lok Sabha polls in 2009—that on the centrality of which party is ruling in different states. So, they argue, if Party A is in power at the Centre and economic growth is high, it will not necessarily win the majority of Lok Sabha seats in State B—if the state has grown well and is ruled by Party C, it is Party C that will sweep the Lok Sabha seats. Which is why, Panagariya and Gupta point out, that even though the Congress party did well in 2009, it won just 9 of the 72 seats in states like Bihar, Orissa and Chhattisgarh—all 3 states saw a jump in their economic growth, but were ruled by non-Congress parties. That’s confusing in terms of what it means for the BJP. The UPA’s poor economic performance should augur well for it if you accept the national-GDP-growth-matters hypothesis; going by Panagariya-Gupta, however, the party shouldn’t pick up too many seats in Bihar, critical to its ambitions. This is one economic theory that should get tested out pretty soon.