Indian Voters Buck the Anti-Incumbency Trend

May 18, 2009 1:00 PM

The victory in the Indian elections by the incumbent Congress party and its allies augurs well for Indian economic-policy reform.

Congress was led de jure by the economist-turned-politician Dr. Manmohan Singh and de facto by the Italian-born Sonia Gandhi, who is part of the Nehru family, which has been a force in Indian politics since the late 1800s and has provided three Prime Ministers.

Two casualties of the election have been the Communists, who resisted economic-policy reform and opposed the nuclear agreement between India and the United States, and the Hindu nationalist party, the BJP.

Going forward, these results suggest that Prime Minister Singh, who is set to continue in office at least for the next couple of years, will continue and perhaps expand the opening of the Indian economy while also paying attention to the problems of the poor and others left out by India’s expansion. Also of significance is that the Congress will be numerically strong enough to not have to rely on partners for political support and will be able to push through new policy initiatives.

Another likely consequence is that the Nehru family will probably provide India, not immediately but within the next couple of years, with its fourth Prime Minister: Rahul Gandhi, son of Rajiv Gandhi, grandson of Indira Gandhi, and great grandson of India’s first Prime Minister Jawaharlal Nehru.

These results are surprising for two reasons. Indian elections have traditionally been characterized by the phenomenon of anti-incumbency: Ruling politicians are routinely thrown out of power. This government is the first in over 40 years to be reelected after a full term in office.

The second reason for surprise is that anti-incumbency has been defied at a time of global economic crisis. While India was affected by the crisis, it has been less affected than other countries for reasons explained in my op-eds "Coupled Economies, Decoupled Debates" and "Why this Financial Crisis Could Have Been Worse." Economic growth, while down from the 9 percent annual rate prior to the crisis, will be about 5.5–6 percent this year. Moreover, rural India, where the bulk of voters live, has done well. Indian agriculture, which has been relatively insulated from the world economy, has been resilient (good monsoons for five years have played their part) and even thriving (sales of cell phones and two-wheelers have been perky). Importantly, the rural employment guarantee scheme that was promoted by Sonia Gandhi helped rural economic conditions and the inclusiveness agenda. The ruling Congress government benefited enormously from all these economic factors.

Internationally, the Indian election results and the performance of its economy during the crisis raise the question of whether the Indian approach to globalization—not too much foreign finance like the Eastern Europeans and not as export reliant as China—has some merit. Goldilocks globalization and dynastic democracy is the model that India is offering the world.

Adapted from a posting on Baseline Scenario.