World’s Largest Contact Sport Begins

 

No we don’t mean tomorrow’s Super Bowl game, though it promises to be a terrific game. We are speaking of a much more intense & brutal contact sport.

Remember the fun & excitement of watching the 2016 Presidential campaign! That was actually a harder & more verbally violent contact sport season, wasn’t it? And the end! Even better that last year’s come from behind win of Tom Brady. And it was far more momentous that any Super Bowl, than any other athletic event anywhere.

To see how momentous elections can be, just think back to May 2014. Pre-Modi India was a joke, an almost pathetic country ruled by a White Italian Catholic woman who literally ran the country as her colonial preserve. Look at India today and you see what one election can do. But the first election win doesn’t solidify the change. It is absolutely imperative to repeat. But repeating is hard. That makes a repeat election a far more interesting game.

That game began this week. With his people-oriented 2018 budget, Indian Prime Minister Modi launched his reelection campaign. Unlike the wave that propelled him to an absolute majority in India’s Parliament in 2014, he faces a more disgruntled & divided electorate. There is little passion in his broad base of support. His religious base is not happy with the support they have received from him. The middle class that championed him passionately in 2014 is sulking. And there is real economic distress in rural poor areas.

No one knows this better than Prime Minister Modi himself. He also knows that victory in India’s parliament is rooted in populous poor North India. India is a unique electocracy in that the poor are the largest & most committed electoral base in the country. The rich hardly vote; even the urban middle class hardly vote with passion.

The poor, on the other hand, know the elections are the only way they can exercise power and they do so with resolute determination. And they are smart, emotionally smart. The uneducated poor understand & recognize which leader is for them, which leader is going to bring them benefits & a better standard of living. They do build an emotional bond with a leader they feel instinctively cares for them.

One such leader was Indira Gandhi. She was an utter failure in her economic policies in 1970s. But the poor instinctively felt she was the one politician who cared for them. No one knows it better than Narendra Modi who won his political spurs by fighting the emergency decree of Indira Gandhi. 

Look how PM Modi has moved his image, his policies since his election in May 2014. He is no longer the leader from the western trading-oriented state of Gujarat. He is the man from Varanasi, the heart of Northern state of Uttar Pradesh, the largest state & electoral prize in India. The past 4 years have been spent in electrifying the villages in Uttar Pradesh & its neighbor Bihar. That is a big step, one that could not have been conceivable a few years ago. But that is not enough.

Hence the budget that was announced this past week. It was literally a budget by the poor and for the poor. The “of the poor” is new. Everyone knows Narendra Modi came from a poor background unlike his chief opponent, the son of the White Italian Catholic Sonia who is reputed to have amassed a massive fortune from ruling India. In the 2014 election, Shree Modi ridiculed Sonia’s son Rahul as a princeling.

This time, the angle of attack seems different. PM Modi will be characterized a man of the poor who has seen poverty & lived in poverty while to his rich, princeling opponent, poverty is a “case-study” to be learned in academic discussion.

But what about “of the poor”? PM Modi announced a huge & transformative health program for the poor in his budget. His plan will provide health insurance cover of up to Rs. 500,000 for 100 million poor and vulnerable families. With a family unit of 5 people, the benefits will reach 500 million people, about 40% of India’s population. This will be the world’s largest health protection plan and its sheer size should enable the Indian Government to negotiate costs of health services.

This is a terrific idea and a classically Modi-style big one. Healthcare is one of the most critical needs of India’s poor and a large health insurance cover can lift poor Indian families to a higher living standard.

PM Modi understands that the most dedicated voters among the poor are the women. And nothing matters more to a wife & mother than the health of her family. Look at the programs launched by Shree Modi and you will see that they clearly benefit & place more power with the women in the family than men. And this health care insurance cover should solidify his standing with poor Indian women.

This will also be a massive economic boost if successful. Because the leverage in the Indian economy doesn’t come from the rich; it comes principally from the huge base of poor & economically deprived half of the country.

There are tradeoffs that PM Modi understands and has chosen to accept. The fiscal discipline has been loosened some to allow for this expenditure. A new long term capital gains tax of 10% has been introduced for stocks held for more than a year going forward. Meaning unrealized gains generated as of January 1, 2018 have been grandfathered. Only future gains will be taxable at 10%. Lucky them, say we who pay 20% long term capital gains.

But there is no doubt, the middle class, the most passionate of Modi base, is upset with this budget. Not only have they not seen any new benefits but some of their benefits have been reduced. But senior citizens in the middle class have received benefits in terms of higher interest deductions.

The logic is simple. The middle class is unlikely to abandon Modi in favor of the terrible & incompetent regime of the princeling of Sonia. They remember the turmoil & terrible days of 2012-2014 and they understand better than most the intense anti-Hindu hate of White Italian Catholic Sonia & her coterie.

So if PM Modi can win the majority of the poor, keep the middle class and get his party to drive the religious Hindu vote, he should win and perhaps win big. His biggest risk is lack of passion in his Hindu base. Such lack of passion helped doom the BJP in the 2004 elections and brought White Italian Catholic Sonia to power. We expect the party workers to remind voters of the lessons of their apathy in 2004. Whether it works or how well it works is an open question.

The strategists of Rahul, the princeling son of Sonia, understand this vulnerability of PM Modi. So they are increasingly positioning Rahul as a devout moderate Hindu. Depend on Rahul & his Congress party to commit to pro-Hindu policies in his speeches. They will try to position Rahul as a Gandhi-type moderate Hindu while characterizing Modi as a hard core Hindu.

The game is clear. Divide the Hindu religious vote and advantage goes to Rahul & his coterie. Unite the Hindu religious vote and the advantage goes to PM Modi. Divide the Hindu economic vote by ethnic strata or jaat and the advantage goes to local parties & Rahul. Unite the Hindu economic vote and the advantage goes to PM Modi.

Hence Modi’s battle plan to fight for the poor as a man of the poor. The game for $1.25 billion vote has begun. It will be a bruising full contact sport.

 

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3 Comments

  1. I am a staunch supporter of prime minister Modi.
    I have admired each and every one of his policies despite having inevitably incurred financial losses due to some of them. My reaction was that the losses I incurred being an NRI were for the greater good of the nation.
    One aspect I find lacking in his policies is nation wide family planning. It is absolutely imperative that we embrace it in right earnest. With 1.3 billion (recorded) of us it is the greatest impediment to progress. I realise it is electoral suicide because it is most needed in the lower socioeconomic classes and ironically, that class forms the largest voter base for the BJP. I sincerely hope and expect Mr Modi to win a landslide victory but in the next term I wish he at least broaches the subject in his usual convincing and confident leadership style. I wish him every success.

  2. This is true but to connect to the poor the government should have made government healthcare better which is the most visible and close to poor and which is in a pathetic state.

    The consolidation of Hindu vote may be difficult this time as Congress is introducing splinter caste groups like Lingayats, Patels and Dalit leaders and using it to divide the hindu votes. Modi needs to placate the middle class and businessmen who are more affected directly by the imposition of GST and demo

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