It is common knowledge in India, that elections are decided by more important factors of caste, regional and other identity based parameters. Does the state of the economy really matter when an ordinary voter is deciding on whom to vote?
The link between the economic performance of the government and the electoral performance of the ruling and opposition parties is a highly researched subject in the West, but till now the answer to the relation between elections and economics is still ambiguous in nature. But there is enough research literature to suggest that on a stand alone basis there is a high correlation between Real per capita GDP (RCGDP) growth rates and vote share of political parties.
Two papers with regard to the Indian context also hint at the existence of a similar correlation in India. A paper by Arvind Virmani (July 2004, ICRIER) on the 2004 National elections and another paper by Poonam Gupta and Arvind Panagariya (Columbia Program on Indian Economic Policies) on the 2009 National Elections do suggest that a part of anti and pro incumbency swings can be attributed to RCGDP growth rates.
Carrying on this interpretation, I have here tried to analyse how the present economic downturn in India will affect the fortunes of the ruling party.
I will elaborate on how I have calculated the relative swings that will manifest, when the elections are held in 2014.
The basic premise is that, electoral swings can be correlated with the relative swing in RCGDP growth rates during the incumbents reign in power.
Let us begin our analysis with the results of the 2004 national elections. The weighted average RCGDP growth rate stands to be 4.10% for the period 1994-98 and 2.96% for the period 1999-2003. Hence the change in RCGDP growth rate is -1.14%. The electoral swings in 2004 national elections are given below,
| NDA Swing | -3.76% |
| UPA Swing | 7.10% |
| BJP Swing | -3.39% |
| Congress Swing | 0.88% |
Similarly, if we analyse the results of the 2009 national elections, the average RCGDP growth rates for the period 2004-2008 is 7.37%. The change in RCGDP turns out to be +4.40%. The electoral swings in 2009 national elections are given below,
| NDA Swing | -4.88% |
| UPA Swing | 3.96% |
| BJP Swing | -3.36% |
| Congress Swing | 2.02% |
We can clearly see that there is a correlation between the change in RCGDP growth rates and the electoral swings.
Now, let us forecast the possible electoral swings, when the national elections are held in 2014. I have utilized the latest IMF and World bank forecasts for the GDP growth rates in 2012 and 2013.
| Year | 2012 | 2013 |
| GDP Growth Forecast | 5% | 6% |
The Weighted average RCGDP growth rate for the period 2009-13 comes out to be 5.16%. This is a decline of -2.2% as compared to that of the previous period average of 7.37%.
If we were to forecast the probable swings based on these numbers, they turn out to be,
| NDA Swing | 1.68% |
| UPA Swing | -6.53% |
| BJP Swing | 2.44% |
| Congress Swing | -7.25% |
(I have skipped on how these numbers have been calculated, but they are based on simple mathematical ratio analysis)
The actual vote shares turn out to be
| BJP | 20.33% |
| Congress | 22.60% |
| NDA | 26.85% |
| UPA | 30.62% |
The recent India Today Mood of the Nation opinion poll suggests similiar vote shares and electoral swings.
| NDA Vote Share | 27.50% |
| UPA Vote Share | 30.30% |
| NDA Swing | 1.80% |
| UPA Swing | -5.40% |
Source: India Today
The accuracy of this mathematical model's forecast seems to be decent based on the opinion polls results. Even if the quantum of the changes turns out to be different in 2014, we can safely say, that economic factors do matter in Indian elections.
Now consider, if the economy continues to go downhill, and the GDP forecasts turns out to be optimistic. Then the reverse electoral swing faced by this government will truly be historic in nature. Time for the government to wake up.
| 1998 | 2003 | 2008 | 2013 | |
| Weighted Avg RCGDP growth Rates | 4.1% | 3.0% | 7.4% | 5.4% |
| Change | -1.1% | +4.4% | -2.0% | |
| NDA Swing | -3.8% | -4.9% | +1.7% | |
| UPA Swing | +7.1% | +4.0% | -6.5% | |
| BJP Swing | -3.4% | -3.4% | +2.4% | |
| Congress Swing | +0.9% | +2.0% | -7.2% |
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