Modi Vindicated In Landslide State Elections

After state elections in India this weekend, Prime Minister Narendra Modi has been vindicated once again. The New York Times reports:

Prime Minister Narendra Modi led his party to a landslide victory in India’s largest state on Saturday, consolidating his power and putting him in a strong position to win re-election in 2019.

The scale of the victory in Uttar Pradesh’s legislative elections was all the more stunning because it followed Mr. Modi’s politically risky decision to eliminate most of India’s cash. The vote was seen as a referendum on the prime minister, who campaigned vigorously in recent days in Uttar Pradesh, which, with a population of more than 200 million, would be the world’s sixth largest country if it were independent. […]

The margin of victory in Uttar Pradesh was the largest seen by any party in more than 30 years. It gives Mr. Modi a significant advantage in the national elections in 2019, which in turn would bring him closer to his long-term goal of becoming a leader of historic significance, steering India away from its more socialist, secular past.

Ever since Modi implemented his controversial cash ban in November, critics have been speculating that the disruptive measure could cost him dearly in the Uttar Pradesh elections. But the decisive victory of Modi’s Bharatiya Janata Party (BJP) suggests that the demonetization policy did not hurt him, and may even have helped. Although the policy certainly inconvenienced many Indians, Modi successfully framed it as a crackdown on corrupt tax evaders, tapping into the populist sentiments that animated his rise. As a farmer in Uttar Pradesh quoted by the Financial Times put it, “He may have hit us in one eye, but he hit the rich in two eyes.”

But although his audacious demonetization policy is paying off, Modi may still not be able to implement the extensive free-market reforms he has long envisioned. Modi’s early liberalizing reforms were blocked harshly and repeatedly by entrenched state interests in parliament, and those obstacles remain despite BJP’s victories at the state level. Still, the recent electoral victory on the heels of the cash ban offers a useful political lesson: anti-corruption reform can work politically in India, even if market-oriented reforms do not. That is sure to affect the party’s political calculations going forward.

Finally, the elections set up BJP for a large-scale governance test in running India’s largest state. The scale of the challenge is huge: with a population approaching 224 million, Uttar Pradesh is larger than France, Germany, and the UK combined, and the state is in the northern ‘cow belt’ of historically poor and backward states, mirroring India’s caste system and ethnic divisions in all their complexity. If BJP governance can accelerate growth and poverty reduction there as it did in Gujarat, BJP has the chance to replace the once-mighty Congress as the natural governing party of India.

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