Though Modi has managed to secure victory in Gujarat province, the victory itself is very narrow and clearly points out Modi’s policies have not gone down well to people of his own province. Two days before election results, even Chinese media Global Times reported that narrow win for BJP may imply the end of economic reform policies by Modi at least up to 2019 parliament election.
Modi indeed managed a mere 99 seats out of 182 seats where 92 is the minimum requirement to form the majority in assembly house. It means BJP seats have reduced by 16 compared to last assembly election in 2012 five years ago. And more noteworthy is it has been reduced by more than 50 seats when compared to BJP’s performance in 2014 parliamentary election that brought Modi to power. The opposition Congress, on the other hand, managed to increase seats by 18 as compared to 2012. So Gujarat election definitely raised hopes for Congress which was not scoring very well recently.
The Gujarat election was important due to several reasons. Firstly, Gujarat was the home province of Prime Minister Modi. Secondly, it is home to one of the most (if not most) entrepreneurial community of India where millions of middle, small and even large businessmen definitely faced bad times due to demonetization and Goods Services Tax (GST). Lastly, the recent agitation by Patidar community led by Hardik Patel of this province for getting the reservation in government jobs clearly depicts the rising anger among unreserved castes against Modi’s appeasement of reserved castes which is not in line with traditional BJP politics. To understand how much important these three reasons are in national politics of India, we need to understand a little bit of history.
Rise of Gujarat
India since its birth in 1947, is dominated by capitalist class from arid and dry provinces of Gujarat, Rajasthan, and Haryana. After Opium Wars West displaced China from its number one position as global producer and exporter. Thus by 1870s, the nerve centre of Indian economic activities shifted from Kolkata (Calcutta) to Mumbai (Bombay). As a result of Bengali Hindu influence gradually waned and West Indian business community influence rose. By the advent of 20th century, Kolkata business became dominated by Rajasthanis, Mumbai business by Persis from Gujarat and Delhi business by Haryanvis. But among all of them, Rajasthan and Persi business dominated all. Rajasthani and Persi businessmen were main financers of Gandhi-Nehru leadership of Congress. After independence, India followed planned economy with huge room for license requirement for conducting business.
Market forces were not allowed much freedom and government policies dictated most of resource allocation program. This greatly benefitted Rajasthani and Persi business houses throughout the country. Tata (Persi) and Birla (Rajasthani) became synonymous with rich class. But from the 1980s, as the planned economy was failing throughout the world, market forces were allowed more, Gujarati business houses like Reliance started to rise. After 1991 economic reforms that put an end to license requirement for doing business, Rajasthani business houses lost considerably and Gujaratis gained most even marginalizing Persi business houses.
It can be said without any doubt, the rise of Modi owe a lot to these risen Gujarati business houses like Reliance and Adani who wanted India to have more market-friendly economic policies. The projection of Modi as “development man” clearly proves this fact. The corporate money spent on electing Modi is also well known. But above all these, there is Gujarati society of numerous small family based small and medium businesses who also dreamt of securing more by making Modi the PM of India. A society that produces small business from every house can create some magnificent big business houses indeed. The society may be the breeding ground of corporate but there are substantial differences between policies that benefit corporate houses and those that benefit small and medium business.
Impact of Demonetisation and GST
This contradiction between the society of small and medium business and big corporate houses became visible when Modi went for demonetisation and GST. Modi tried to tackle black money i.e. money earned not shown to the government to avoid tax payment through demonetisation of 1000 and 500 rupee notes. Many businessmen with black money never kept this money in banks and so demonetisation forced them either to show this money by depositing in banks or have to destroy them. It can be said that small and medium business while holding black money in hands most big business and even some medium business store black money in form of real estate, foreign accounts, etc. So small businesses are most likely to get hurt from demonetisation. Such brave policy may be clapped by corporate houses but small family based business would never cherish such actions. Corporate have tax holidays but small and medium business will never have them. In case of GST too, the cost of maintaining accounts rose considerably which is not an important issue for big business for it can work with scale. But such rise will raise fixed cost of small business a lot since they do not have the flexibility of working with scale. GST is proved to be very difficult for common businessmen to understand and the hurry with which GST was implemented clearly made it even more unpopular.
Indian constitution was drafted by Dalit politician Ambedkar where he gave room for reservation in government jobs on the basis of caste which claimed to be historically backward. Gradually, vote bank and reservation started to get related. New castes with substantial vote bank began to claim themselves backward and started to get reservation under “other backward caste” criteria. Many new castes were introduced in scheduled caste” criteria too. The caste politics soon proved itself to be more about vote bank than about claimed historical backwardness. While vote bank forced all political parties to side with reservation, BJP was the only party that claimed that reservation must be given only on the basis of economic class where a poor brahmin may be given reservation while a rich Dalit must never be given.
This stand drew criticisms that BJP actually does not want lower castes to prosper since it is led by upper castes. The critics also pointed out that Hindutva politics is actually about upper caste domination who want to subdue other castes in the name of pan Hindu nationalism. It is this pressure of Dalit and another backward caste (OBC) vote bank, that Modi and his right-hand man Amit Shah (both not from upper caste) could displace upper caste leadership of L.K. Advani, Shailendra Kulkarni, Murlimanohar Joshi, Yashwant Sinha, etc. within the BJP. Reservation politics is destroying the quality of academia and administration in India and vote politics has definitely forced Indian politicians to overlook the problem. The problem became acuter after 2008 financial crisis when government services became most lucrative and secured while private jobs and business were no longer much profitable, unreserved castes began to question reservation.
When Modi was elected to power, many common people from unreserved castes thought that some actions will be taken against reservation not noting that the rise of Modi within BJP imply that BJP is towing the line of reservation politics. But as Modi was declaring more pro Dalit and pro OBC policies, unreserved castes got angry. The Patidars and Jats went on the rampage for getting the reservation. Jats being the most effective tool in the riot against Muslims in Western UP got OBC status, but Modi government refused to give in to Patidars. Unreserved Marathi caste in Maharastra began to agitate for reservation as well. Even brahmins of Gujarat demanded reservation and in their demand, they presented the innovative policy of zero interest rate loans to brahmin businesses as Brahmins are historically backward in doing business. This reservation in business is clearly a challenge to Ambedkar’s concept of reservation which fixes reservation and definition of historical backwardness only in terms government jobs.
So the point is Gujarat assembly election tested Modi’s vote and money base, his economic policies and also his pro reserved caste policies. BJP scored very badly in rural Gujarat and only four big cities came to its rescue. So small, medium business and peasantry are definitely unhappy with Modi. Big business is still with Modi. Unreserved caste for the first time showed that they can become a formidable force if ignored too long. In UP election, BJP won by wooing non-Yadav OBC vote bank against Yadav OBC vote bank and giving upper caste leaders more prominent role. The rise of fallen upper caste was clear when Rajput upper caste Yogi Adityanath was made Chief Minister in UP. With marginal victory in Gujarat, Modi will be weakened considerably within BJP while Advani-Kulkarni-Joshi-Sinha upper caste leadership will gain upper hand.
The later will definitely want the victory of BJP but also a weak Modi. Gujarat result and UP result before it definitely proves upper caste leadership is making slow and steady come back. They will not prevent Modi from contesting as PM candidate in 2019 but definitely, they will be making room for UP CM Yogi Adityanath as PM candidate in 2024. Modi will undoubtedly fail to carry out tough economic reforms in the coming year. He will be forced to compete with rising political star Yogi in the coming years who has produced good election results in municipal elections.
Though main opposition party scored well in Gujarat, still it fails to win. Even after riding in twenty-two years of anti-incumbency tide along with deep impact from demonetization and GST, Congress failed to dispose of BJP. Gujarat is especially inhabited by the much small business which felt the heat of demonetisation and GST. Most other states will not have this character. This is proved by the good result of BJP in Himachal Pradesh assembly election where they won comfortably. So Congress can make a come back cannot be claimed from Gujarat result. Instead, it can be said upper caste lobby win over Modi. Now Modi is weakened and Congress is still way behind BJP across India. It is Advani-Kulkarni leadership that has actually won.
The coming year can see rising Yogi and falling Modi which implies more movement from unreserved castes against reservation. The construction of Ram Temple on controversial land will find more open sympathizers and Yogi being from UP province can score most from this issue. Anti Muslim hooliganism will be bolder. Gujarat corporate and UP-Bihar semi-feudals will see more open confrontations. Indian politics will be more about religion and less about the economy in the near future. We must keep in mind that Surendra Kulkarni is only Indian politician who had visited BRI Summit 2017 and embraced it. With Kulkarni lobby gaining from Gujarat election result, we must see if New Delhi’s attitude towards BRI remains same. This month, India has lost Sri Lanka, Maldives, Nepal to China’s BRI and there are reports of Chinese military build-up and infrastructure creation in Donglang plateau. These prove Modi’s open muscle flexing policies against Beijing is futile. Though Indian security professionals irrespective of which party in power look towards China with skepticism, the rise of Advani-Kulkarni lobby can be calibrated properly to give desired results in favour of BRI and China.
DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy and position of Regional Rapport.