Is the state’s rural discontent real and can it hurt the BJP?
Fluctuations in agricultural growth, sharp fall in cotton prices under present govt may have hurt rural economy
That rural discontent can hurt the BJP has emerged as an important narrative in the ongoing Gujarat election campaign.
The final round of the pre-poll survey by Csds-lokniti captures this trend. Among farmers, the share of Congress voters is 11 percentage points more than that of BJP.
The survey shows that the Congress is ahead of the BJP in three out of four rural sub-regions in the state.
Is there an objective basis for this theory? The short answer is yes. Multiple factors may have added to the rural economy’s problems in the period under the present government.
This might have led to a reversal in fortunes from the times when Narendra Modi was the chief minister.
We first look at four sub-periods for this long-term analysis of the performance of various governments in Gujarat: Congress (1980-81 to 1989-90), BJP before Modi (1995-96 to 2001-02), BJP under Modi (2002-03 to 2011-12) and BJP after Modi (2012-13 to 2015-16).
While BJP won the 2012 assembly elections under Modi’s leadership, he was the chief minister for just one-and-a-half years after that before moving to the top job in New Delhi.
We look at compound annual growth rate (CAGR) of overall GSDP (Gross State Domestic Product) and that in agricultural and allied activities in these periods.
For the first three periods, the 2004-05 series of GSDP has been used. From 2012-13 onwards, the 2011-12 series of GVA (Gross Value Added) has been used.
A cursory look at these figures suggests that Gujarat’s overall economy as well as agriculture has continued to grow at a fast pace even during this government’s tenure (see chart 1).
In fact, there has been an increase in agricultural growth under the present government. However, these headline numbers could be misleading.
Year-on-year growth in agriculture and allied activities component of GVSA (GVA added in the states) has seen wild fluctuations in the last four years for which data is available.
For three out of these four years, agriculture has seen a decline or near-zero growth in the state (see chart 2).
This seems to be a result of huge deficiencies in rainfall in the state.
Many regions of the state faced floods this year as well, which must have hurt agricultural production.
Gujarat produces around 30% of India’s cotton, if one takes the average of last five years.
International cotton prices had more than doubled in Narendra Modi’s second term as chief minister.
Between 2011 and 2016, they have fallen sharply. As a result, unit value of cotton exports has fallen sharply after having risen continuously for more than a decade (see chart 3).
These two factors are bound to have left an adverse impact on rural incomes.
Rural Gujarat saw better times under Modi’s administration.
An analysis of average Monthly Per Capita Expenditure (MPCE) from the National Sample Survey Office (NSSO) shows that CAGR of MPCE in rural Gujarat was the highest under the period which broadly coincides with Modi’s tenure (see chart 4).
In fact, people in rural Gujarat had a higher growth in their consumption spending than their urban counterparts.
A comparison with all-india trends shows that this is quite a big achievement. It is reasonable to assume that MPCE growth moves closely with incomes.
Agricultural growth is an important driver of political fortunes in state elections. In 2015, a Mint analysis looked at agricultural performance of all serving state governments which had won at least two consecutive terms. All of them had delivered higher farm growth than their predecessors. (http:// bit.ly/2kbwwj1)
There is every reason to believe that Gujarat’s voters see the period of Modi’s chief ministership differently from even BJP governments before and after him.
Have rural voters decided that the present government is not a worthy successor to Modi’s legacy? Or will the fact that Modi is spearheading the campaign for the BJP make a difference? We will find out on December 18.
INTERNATIONAL COTTON
PRICES HAD MORE THAN DOUBLED DURING MODI’S SECOND TERM AS CM. BETWEEN 2011 AND 2016, THEY FELL SHARPLY. AS A RESULT, UNIT VALUE OF COTTON EXPORTS HAS FALLEN SHARPLY