Issues of Economic Development and Welfare in Election: Recent Trends

Sujoy Ghosh

It is popularly believed that an incumbent party’s past performance is the principal factor determining individuals’ voting decision. Economic prosperity in terms of development and welfare would be one of the most significant election issues that can assure higher vote shares for the incumbent party. Like in many other democracies, the evergreen question therefore is: do Indian voters vote retrospectively, assessing past economic performance and reward parties that deliver higher economic development and welfare?

During the last five years (2017-21), there are 30 states that voted to elect their state government and for our study we considered 23 state elections (Arunachal, Meghalaya, Mizoram, Nagaland, Sikkim J&K and Puducherry are out of scope of our study). Analysing results of those elections we have tried to assess whether the issues of economic development and welfare were the major factors in the recent past elections in India.

Among 23 state elections we studied, 43% of states voted for change (i.e. 10 out of the 23 states) since 2017 and there are 3 states where no particular political party or pre-existing coalition had an absolute majority. Considering that anti-incumbency is one of the major reasons of hung assembly, we can say that there are 13 states that reflects anti-incumbency in recent elections.

So, what is it that works for the anti-incumbent political parties or what drives the voters to vote for the anti-incumbent political parties?

To analyse, we consider State GDP (SGDP) Growth rate and Rate of Unemployment as quantifiable yardsticks to judge economic development and Rank of Human Development Index (HDI- a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions) as a measure of welfare performance during the period of incumbent party’s government.

Data shows that among 13 anti-incumbent states, 8 states (Punjab, Uttarakhand, Himachal Pradesh, Tripura, Chhattisgarh, Rajasthan, Andhra Pradesh and Jharkhand) that had declining SGDP growth with increasing or flat rate of unemployment, rejected the incumbent party. However, in Karnataka and Madhya Pradesh in spite of dipping economic growth, election outcome didn’t favour the anti-incumbent parties. On the other hand (in sate of Goa), even in a stable economic situation (increasing SGDP & Flat rate of Unemployment), election outcome didn’t help the incumbent party.

Source: Election Commission of India, RBI Hand book of Indian Economy, CMIE and UNDP 

A notable example is the state assembly election in Uttar Pradesh (2017) where anti-incumbent party won 77.4% of all assembly seats. Uttar Pradesh is a state where economic growth and unemployment is more of a structural problem and rank in Human development index is very low for more than a decade. With a very prominent dominance of caste, religion and identity based politics, this state has experienced several changes in the office of state government but situation remains more or less same. In a state like Uttar Pradesh with all these complex factors it would be very naive to conclude that issues of economic development and welfare were major issues in the election of 2017.

Another interesting electoral outcome that came out just few weeks ago is the state assembly election in Tamil Nadu, where both economic development and welfare indicators were positive and grew during the period of incumbent government, yet people voted for the anti-incumbent parties (coalition).

Now we would like to take a look at those 8 states (Gujarat, Telangana, Haryana, Odisha, Delhi, Assam, Kerala and West Bengal) that re-elected the incumbent party. Among those 8 states there are 5 states (Telangana, Haryana, Odisha, Kerala and West Bengal) where economic development (in terms of SGDP growth and Unemployment) was on upswing and HDI rank was either improving or remain stable implying an overall welfare of the people. But remaining 3 states (Gujarat, Delhi and Assam) experienced decline in economic growth with a rising unemployment, yet re-elected incumbent party.

Source: Election Commission of India, RBI Hand book of Indian Economy, CMIE and UNDP 

*Bihar and *Maharashtra have their own story to tell to their peer states. In Bihar, data reflects economic growth during the period of incumbent party but unemployment was not under manageable rate and the state was at bottom on the list of sates in HDI rank. Hence, anti-incumbency was on the rise and employment was one of the major issue in the election. The election outcome was very much surprising to the political analyst as well to the common people. JD (U) led by last chief minister Nitish Kumar lost ground but the alliance (NDA) won the election. Moreover, anti-incumbent RJD became the largest political party (with fewer numbers of seat than 2015) but BJP (that was already in incumbent NDA coalition with JDU) gained the most seats (+21 vs. 2016).

In Maharashtra economic growth was pegged between 10-11% and unemployment was on the rise. So it was difficult to conclude anything based on the state of the economy. Though both Bharatiya Janata Party (BJP) and Shiv Sena (SS) lost some of their seats (they lost in 24 seats vs. 2015), the ruling National Democratic Alliance (NDA) of the BJP and SS won a majority. One of the major anti-incumbent parties – Nationalist Congress Party (NCP) gained the highest number of seats (+13 vs. 2015) in this election.

In totality, out of 23 state elections during 2017-2021, there are 13 state elections where electoral outcome appears to be influenced strongly by the issues of economic development and welfare. Whereas in the remaining 10 states, electoral outcomes seem to be more influenced by other issues than economic development and welfare.

We have seen that, recent election outcomes and available economic data gets us no closer to determining if economic development and welfare played a significant role in the electoral behaviour  vis-à-vis political party’s electoral prospects across different states in our country.

In reality, when hundreds of millions of people vote in a complex election with many issues at play, there is an inevitable element of randomness in the final outcome, which aggregates across the preferences of all these individuals.

*Sujoy Ghosh is a Trend Watcher ( Economy and Politics and holds a masters degree in Economics

Kindly note that the point of views expressed in the article are entirely the author’s personal views. IPD takes no responsibility for the same.

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