BJP may have won Gujarat but the pain of not having achieved targeted 150 seats will remain for sometime for the party. But what is likely to have maximum impact is the alienation of rural voters. While GST and demonetisation clearly seem not to have too much of an impact on urban voters, it is the rural disenchantment that will weigh heavily on BJP's mind and will in turn get reflected in their policies as well.
"The key lesson for BJP here is that, if development remains lopsided, in other words if it is not broad-based then people become disillusioned and that's what has happened with rural voters. As a country, we are growing at 6-7 per cent, but that has not made a significant difference to the lives of people in these areas. Signs of rural distress are all across,” says Sunil Sinha, principal economist, India Ratings.
To correct this anomaly, it is expected that government might boost rural spending. Increasing the minimum support price (MSP) could be one obvious step. There might be increased allocations for rural projects such as MGNREGA and PMGSY.
"Like it has happened in the past, this time too government will take populist measures such as cheaper power and farm loan waivers to temporarily assuage farmers. Until the fundamentmal issue of productivity is addressed, these measures will not help much,” says Sinha.
B.L. Pandit, former head of the Department of Economics at Delhi School of economics however feels that, given the loss in number of seats, disruptive reforms would not be pursued going ahead. "Populism will rule. Right now they are eyeing 2019 and economy will take a backseat for now. Majoritarian politics is what we will see going ahead,” he says.
Further streamlining of GST and focus on employment creation cannot be ruled out. With government raising a handsome amount through disinvestment this year, experts feel that some of the proceeds might be used to fund this spending.
Elections in eight states in 2018 are all the more reason why government would like to spend on populist measures keeping fiscal prudence at bay. The fiscal consolidation target will also have to be revised, if government allocates more money for such projects.
