Missing E-factor

THREE months have gone by since the new government was elected with an unprecedented mandate in the recent years. World's largest democracy, arguably, also has the most costliest electoral exercise. Actual spending is seen dwarfing the official ceiling on expenses by candidates. The first three months after the 2009 and 2014 had shown economy spurting seemingly on the back of asteroid doses of the largess splurged by political parties in the length and breadth of the country. Yet, 2019 strikes a discordant note.

Dismissing a strategy meeting weeks ahead of the 2019 Lok Sabha elections, the BJP chief Amit Shah was seemingly exasperated. To a question on going big on media blitzkrieg, Shah blurted out to a fellow party leaders -- "First, let Arun ji and Piyush settle their quarrel".  

In the run up to the 2019 Lok Sabha elections, all knew that the contest would be unequal. Not that the BJP had the greatest of the poll mascot, but for the fact that others had hugely depleted coffers. Loss of key states had, arguably, bled the Congress treasury white. Regional parties weren't better off. The BJP treasury, however, was in its prime pink. It was evidently clear that one political outfit would take the pole position in election spending to swing the outcome of the poll. Others will be bystanders.

The BJP, thus, was deliberating "how and where" to unloosen the fat purse. "Arun Jaitley was firm that the party should give more money in the hands of the block and district level functionaries. Piyush Goyal argued that the BJP should spend more on media blitzkrieg. There was no common ground," said a functionary, who attended such strategy meetings at the BJP headquarters.

Jaitley had been ailing. He seemed fragile. His muscles had loosened. Yet, he stayed put at the BJP headquarters to man his mandate -- strategizing and perception management. "The BJP spent 42 per cent less on media advertisements in 2014 Lok Sabha elections in comparison to 2009 general polls. Jaitley's prescription was accepted, that more funds would go in the hands of foot soldiers of the party across the country than being spent on media and other publicity platforms," added the functionary.   

That media is currently bleeding in an affirmation to the changed tack of the political outfit with the most bloated moneybag. 

THE 2008-09 financial year was one of the worst for Indian economy. The Gross Domestic Product (GDP) had slumped to 3.09 per cent on 2011-12 baseline (6.72 per cent under the 2004-05 baseline). The Manmohan Singh led UPA had retained power at the Centre. The Congress ruled in a large number of states. The Congress coffer must have been spilling over the brim. The money was well spent by the party. The 2009-10 fiscal clocked 7.86 per cent GDP growth as per the 2011-12 baseline (8.59 under the 2004-05 series).

Electioneering splurge had seemingly knocked off the slowdown fangs to release adrenaline in the lifeline of the economy. The story re-ran the script in 2014 also with much greater intensity. The first quarter clocked GDP growth of 8.02 per cent under the revised 2011-12 series only to ascend steeply to 8.70 per cent in the second quarter, mapping the first three months after the election results. 

The first quarter of the 2019-20 fiscal delivered a fiver for the GDP growth. Five per cent for India is by all accounts a commentary of the economy in the worst health. The first three months of the Narendra Modi government in the second tenure would report the second quarterly growth. That the economy is gasping for breath is affirmed indisputably with the government finally waking up to the deep structural reforms covered by disinvestment.    

Dissonance between electioneering largess in the form of arming foot soldiers with party funds and the economy crying erosion of demand is palpable.

The BJP and allies, indeed, put the money in the pockets of the foot soldiers. But the money didn't spread out as intended to a significant extent. The BJP workers are full of tales about their peers pocketing the money but not passing on to the targets. They did so, because they were confident that victory in the elections was already on their side. That they became thrift with the large flow of money in their hands was also on account that Modi was winning them elections. 

THE money in place of being in circulation got stuck. And that possibly explains the missing E-factor of the economy. Electioneering splurge too failed to wake up the animal spirits of demands. That the printing of high denomination Rs 2000 currency is no more being printed could also be an after-effect of the 2019 Lok Sabha elections. The government in an RTI reply has admitted that the Rs 2000 currency hasn't been printed yet in the current financial year. The ATMs running dry in elections times has been pos-2017 phenomenon. Did the availability of Rs 2000 notes help push the cash flow to the electoral agents who in turn sat over the pile of cash to unleash demand depression in the economy? Circumstantial evidences suggest a fair correlation.