High Inflationary Pressure On Economy Has Emerged As Major Issue For 2024 Polls

The most significant political development this year is not the formation of the Indian Development Inclusive Alliance (INDIA), a congregation of forces opposed to the BJP. It isn’t the tentative alliance that BJP is seeking to build with its older and newer partners. And it it’s the G20 summit, which is much a diplomatic event as a political one to symbolize India’s success in the domain of international politics under Prime Minister Narendra Modi.

The most important is persistent inflationary pressures on the national economy. The BJP is fully aware of the political implications of inflation. From 1998 state assembly elections, where high onion prices cost the party its government in Delhi, to 2013-14, the link between politics and prices is very crucial, food prices comprise a substantial element of inflation basket, is quite clear to the party’s managers.

Indeed, in his Independence Day address from the ramparts of Red Fort, even PM pushed forward a narrative of progress and achievement, Modi sneaked in a brief segment on inflation where he acknowledge the problem.

He attributed it to the global climate, with pandemic and then the Ukraine war destabilizing markets. “Today the world is facing the crisis of inflation. We import some goods from around the world. Unfortunately, we also import inflation.” But then, recognizing this is a wide spread concern—Modi was delivering his speech on a day after data showed that headline “consumer price index had jumped from 4.9 per cent in June to 7.4 per cent in July – he said that India had tried its best to control inflation. “Compared to the past, we have also some success, but should not be complacent with that things are better than that in the world. I have to take more steps in this direction to minimize the burden of inflation of countrymen. And we will continue to take that step.”

Inflation has coincided with what economists believe has been a K-shaped recovery of the economy after the pandemic; the terms refers to the phenomena where corporate have seen profit-led growth and the upper middle classes and segments of the middle — classes and segments of the middle-class have done reasonably well but, simultaneous, there has been a dip in the incomes and living standard of a much greater segment of the population — the poor in rural and urban areas, small farmers, labour in the informal sector, and lower middle classes.

Thus, even as major structural issues that have haunted the economy for decades, of persistent unemployment and a manufacturing sector that doesn’t have the base and capacity to accommodate the millions who join the work force remains.

Supplement this with one more factor. In a recent piece for Indian Express, the Economist Jean Dreze convincingly argued that the real wages of male agriculturalist labourers, non-agriculturalist labourers and construction workers grew at less than 1 per cent between 2014-15 and 2021-22; he pointed out to a recent data suggest that in 2022-23, the growth rate of real wages for the first group was just 0.2 per cent and that the other two actually saw a decline.

It is in this backdrop that the 2024 campaign will hinge on a variable that neither surveys by pollsters nor reports by journalists have yet been have yet been to unravel. Are the poor in India disillusioned? Or are they angry? Or the poor in India disillusioned? Or they hopeful? And more importantly, do they blame somebody for this?

But while the Opposition may bank on precisely on this juncture in the political economy to assume that voter is angry and, therefore, its prospects are better in the next elections, recent political and elector history has shown that it will be committing a grave mistake in underestimating the BJP for four reasons.

One, the party has robust feedback channel and is aware of the ground realities. As the PM’s speech indicated, both economic data from the top as well as organizational feedback from the ground have already equipped the party leadership with the information on prices and how these are affecting the lives of to address the gaps and vulnerability. (IPA Service)