Will BJP pay for the slowdown?

It depends on how cleverly the Opposition exploits the issue

Narendra Modi’s government can claim a better record in terms of overall economic growth compared to its predecessor. The compound annual growth rate of GDP under the present government is 7.4%, compared to 7% and 6.2% for the first and second United Progressive Alliance (UPA) governments. To be sure, these comparisons are based on the new GDP back-series figures, which have been questioned by not just the Opposition but many independent experts. Even if one were to ignore the criticism, they do not seem to be bringing good news for the government just before the elections. The GDP growth has been declining continuously for three quarters now. India’s GDP grew at 6.6% in the quarter ending December 2018, the third lowest under the present government. On Tuesday, the government released growth figures for the Index of Industrial Production (IIP) for January, 2019. The factory output growth was reported to be just 1.7% . IIP growth did not do well in November (0.3%) and December (2.6%) as well.

This slowdown in the non-farm economy has come on the back of a crisis in the farm sector, where farm incomes have faced a severe squeeze due to worsening in terms of trade. This means the prices of agricultural products are rising at a much slower pace than that of non-agricultural products. The Consumer Price Index data released on Tuesday shows that the prices of food items such as vegetables, pulses and sugar have gone down in the period between April 2018 and February 2019 compared to what they were in the same period in 2017-18.

Will these factors hurt the Bharatiya Janata Party (BJP) in the elections? One should tread with caution before jumping to conclusions. The electorate does not vote on economic considerations alone. Whether deceleration becomes a political issue or not also depends on how the opposition takes up the issue. The BJP seem to have realised the importance of taking corrective measures: A retrospective income transfer scheme for farmers in the budget is the biggest proof of such thinking. One will have to wait for May 23 to know whether the economic deceleration hurt the incumbent in the election.