More votes can be won by accelerating FDI in retail chains

The BJP has given notice that it is a real contender for power again in the 2009 general election SWAMINATHAN S ANKLESARIA AIYAR The Economic Times WEDNESDAY, FEBRUARY 28, 2007

Lesson No 4. Rapid GDP growth with high inflation causes electoral defeat. This has been proved time and again. Narasimha Rao achieved GDP growth of 7.2% and 7.5% in his last two years in office, but the consumer price index rose by a cumulative 22% over these two years, so he got thrashed in 1996. The BJP thought that India was shining when GDP growth soared to 8.7% in 2003-04. But wholesale price inflation rose from 3.4% in 2002-03 to 5.5% in 2003-04 and 6.5% in 2004-05, and that was fatal. Today, after two years of more than 9% GDP growth, the Congress has been beaten in Punjab and Uttarakhand...

Lesson No 6. The rapid growth of services in cities yields very poor political dividends. In 2004, the metros — Mumbai, Delhi, Kolkata, Chennai and Bangalore — voted massively against the NDA. Chandrababu Naidu was humbled in Hyderabad. After 2004, service industries continue to roar ahead, but this may not benefit the Congress. The very same BJP that was thrashed in the cities in 2004 has won 17 of the 23 urban seats it contested in Punjab. Earlier the BJP swept the municipal elections in Maharashtra and Uttar Pradesh.

Lesson No. 7. Rapid industrialisation did not help the Congress in Uttarakhand, since modern industry is highly mechanised and creates few jobs. Tata Motors and Bajaj Auto have both doubled their production while halving their workforces. Far more rewarding electorally are new seeds that can raise agricultural incomes. Bt cotton and the promise of big retail chains (like Reliance) helped the Congress wrest several seats from the Akali Dal in its traditional rural stronghold of Malwa. Lesson: more votes can be won by accelerating FDI in retail chains than Sonia realises.