Consensus may be exaggerating pro-BJP wave: Emkay's Sinha
The General election 2014 will be extremely crucial for both the BJP and the Congress. On the one hand, it will test Narendra Modi‘s credibility and, on the other, it will be a major test of leadership of Rahul Gandhi, and effectively that of the overall leadership of the Gandhi family in reinforcing the Congress‘ endurance.
December 02, 2013 / 18:12 IST
Dhananjay Sinha
The consensus view favouring the BJP-led dispensation, following the 2014 general election, presupposes the restoration of the 1999-2004 type pro-growth and pro-investments phase, and a shift away from the overly socialist approach of the United Progressive Alliance (UPA). Based on our analysis of a) state election outcomes, b) pre- and post-election alliance dynamics, c) swing factors, and d) election manifestos, we conclude that these assumptions could be premature.State elections: BJP could be ahead with 2.5/4: Projections of opinion polls are decisively skewed in favour of Bharatiya Janata Party (BJP), with the party securing a clear majority in all states except Delhi, where it falls short of a majority. Hence, the opinion polls seem to suggest 3.5/4 for the BJP. However, scenarios have been changing since the last survey as the sentiment has picked up from the ground suggest that while the verdict in Madhya Pradesh and Chhattisgarh could be in BJP’s favour, the bias in favour of the BJP in Rajasthan could be swinging back to the Congress. Hence, there is a reasonable probability of 2.5/4, instead of 3.5/4.Also Read: Nifty may break 6000-6200 on either side in Dec, says UdayanGeneral elections Outcome critical for both BJP and Congress like never before: The General election 2014 will be extremely crucial for both the BJP and the Congress. On the one hand, it will test Narendra Modi’s credibility and, on the other, it will be a major test of leadership of Rahul Gandhi, and effectively that of the overall leadership of the Gandhi family in reinforcing the Congress’ endurance. The predicament for Narendra Modi is that he is confronting a steep target to establish his creditability even within the BJP. Consensus view could be premature: A consensus view is working on a presumption of a near-certain Modi-led BJP government as the outcome and the watershed in public policies. Our analysis of the potential election outcome, along with the survey of the BJP and the Congress agenda in recent times, suggest that it may be premature to assume either of these views. Swing factors: Pro-BJP swing needs to be immensely strong to dislodge UPA: The perceived swing factors for the BJP are centred around the Modi wave capitalizing on a higher vote share from: a) urban areas, b) youth, c) upper OBCs, and d) a higher voter turnout of over 60 percent. The BJP’s gambit could be to take advantage of the current negative sentiment against the Congress on issues such as corruption, inflation and the declining pace of good quality employment and thereby reversing its vote share, which has declined since 1998. In our view, the pro-BJP swing factor is not so obvious, as it is contingent upon significant gains in vote share from both regional and other parties, and the Congress. a) BJP has lower probability to strike pre-poll alliances, which gives the Congress the edge, b) the Congress has been ahead of the BJP in fighting to regain its lost vote share, c) the UPA accelerated pro-poor, pro-rural programmes over 2009-13 provide the Congress the ability to retain its lead over the BJP in the vote share (10 percent in 2009).Election outcome 2014: High chance for NDA, but a Third-Front equally potentWhile guessing the outcome of the 2014 general election is difficult, we assess the possibility of the pro-BJP outcome starting with a pessimistic consensus assumption of 100-120 seats for the Congress and regional/other parties (240-270 seats), gaining a vote share in line with the 20-year trend. Critical to the BJP’s Mission 272-plus is the need to achieve 200 seats along with its current allies. The possibility of Modi eventually becoming the prime minister will crucially depend on whether the National Democratic Alliance (NDA) crosses the 200-seat threshold in a convincing manner. Considerations that work against the pro-Modi and the pro-NDA assumptions are that: a) the BJP’s fight will largely be standalone, and will look for alliances post-elections, and b) the BJP’s fortune is narrowing down to core 321 seats in 11 states (mostly in the Hindi heartland states), importantly Uttar Pradesh and Bihar, implying a steep success ratio.In our scenario analysis, we attribute equal probability (40 percent) for the BJP-led NDA and the Third-Front dominating the government in 2014. Scenario-I (Base case, 40 percent probability): the NDA gets 170-180 with the BJP bringing in around 155 seats. The BJP forms the government, but compromises post-elections to attract coalition partners, as it is difficult for the party to cobble up 272 seats; Scenario-II (20 percent probability): the NDA gets 200-220 seats; the BJP forms government led by Modi. Scenario-III (40 percent probability): the NDA gets 150-170 seats. The Third-Front becomes an important contender as the total tally of the BJP and the Congress barely reach 273 seats. The UPA stands a better chance to support such a formation compared to the NDA. If the Congress manages to do better than the pessimistic assumption of 100-120 seats, the likelihood for the Congress increases. Policy orientation: Race towards competitive populism; BJP will be no differentBased on: a) the survey of manifestos of earlier elections and of state elections in 2013 and b) our discussion with senior leaders, we believe, there will be little change in broader policy framework even with a BJP-led dispensation. A comparison of manifestos of the BJP and the Congress over the recent general elections (2004 and 2009), and state elections (Karnataka 2013, and recent elections in Rajasthan and Chhattisgarh) indicates a broad convergence. Reflecting the social agenda of the Congress, the BJP manifestos draw a similarity with respect to farm sector, housing, food security, farm loan waiver, black money, infrastructure sector, easy credit, tax reduction and land acquisition. While the BJP is still not ready with its election manifesto, leaders from the BJP were emphatic that these policies will continue, but with a promise of better governance. Experience from the 2004 defeat will likely prevent the BJP from announcing any major change in the socially inclined policies.(The author is head of institutional research at Emkay Global) Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
