India: behind the election results

Indian stocks rose to record highs as the election results became clear

The following paper was written before the results of the Indian elections were confirmed. It comes from RUPE (the Research Unit on Political Economy), an Indian Marxist site to which we link (see our links section). The paper outlines why the Indian ruling class has shifted allegiance away from the Congress Party and to Narendra Modi’s Hindu-exclusivist Bharatiya Janata Party (BJP). While the BJP is probably best known for its Hindu fundamentalism and supremacism, imposing the policies Indian capital needs right now is at its core. The BJP took just under 172 million votes (31%) and 282 seats to Congress’ just under 107 million (19.3%) and mere 44 seats, down from 206 seats in the previous parliament. The seats result gives the BJP an outright majority in the 544-seat Indian parliament.

More than two weeks remain for the declaration of the election results (May 16). However, discussion in the media more or less takes for granted that the Bharatiya Janata Party (BJP), or rather its leader Narendra Modi, will win. And this presumption may well be justified. For he has clearly won, by a landslide, the constituency that matters most: the private corporate sector. In fact, polls for that real constituency were over last year, and they have drastically shaped the formal elections being held this year.

This fact is so well known that it now hardly bears repeating. Last September, the Nielsen/Economic Times survey of 100 corporate leaders found that 74 per cent favoured Modi as prime minister, compared to just 7 per cent who favoured Rahul Gandhi.[1] But the drumbeat began much earlier. Telecom magnate Sunil Mittal declared in 2009 itself: “He [Modi] is running a state and can also run the nation.” At a ‘Vibrant Gujarat’ summit, Anil Ambani called Modi “lord of men, leader amongst leaders and king amongst kings”, and Mukesh Ambani affirmed that “In Narendra bhai, we have a leader with a grand vision.” Anand Mahindra prophesied that in the near future “people will talk about the Gujarat model of growth in China.” When Modi organised an extraordinary package of clearances, land and huge subsidies for Tata Motors’ Nano car project, Ratan Tata joined the Modi fan club. Having tasted peasant resistance in Singur, what Tata found attractive about Modi was that “If he says it will be done, it will be done”.[2]

Several studies have appeared in the last two years countering the myth that Gujarat under Modi has been a model of growth and governance.[3] But it is important to note that it was corporate chieftains who helped create the myth in the first place. Gushed Tata: “I have to say that today there is no state like Gujarat. Under Mr Modi’s leadership, Gujarat is head and shoulders above any state.” Mukesh Ambani said that “Gujarat is shining like a lamp of gold and the credit goes to the visionary, effective and passionate leadership provided by Narendra Modi.”[4]

Crucially, foreign capital, as represented by the international credit rating agencies, has cast its vote. The research wing of Moody’s bluntly declared in January: “If elected, a Modi-led BJP government should offer a more business-friendly policy that will further support confidence and investment.” Last November, Goldman Sachs, the world’s leading investment banking firm, upgraded India’s rating on the basis of predictions that Modi will come to power: “Equity investors tend to view BJP as business-friendly, and its prime ministerial candidate Narendra Modi as an agent of change.” The Japanese brokerage firm Nomura said it expected a BJP-led coalition to form the next government. The share market has surged with inflows of foreign institutional investor capital. Last year the UK and several European Union countries sent their ambassadors to meet Modi, and the US ambassador made the trip to Gujarat’s capital in February this year.

Unprecedented focus on the corporate constituency
For admirers of India’s parliamentary institutions, it ought to be puzzling that the views of foreigners and a mere handful of Indians are given such prominence, even when they do not directly influence the masses (unlike, say, godmen, film stars, and other entertainers). Yet a curious feature of the current election campaign has been its unprecedented focus on what the corporate sector wants from the polls (and, correspondingly, a near-absence of the burning economic questions of the working people). A visitor from another planet could be forgiven for assuming that the electorate was composed solely of corporate chieftains. In his address to FICCI on December 21 last year, Rahul Gandhi talked of them as “the voices we represent”:

A political party’s strength lies in the voice of those it represents. We will listen to the voices we represent…. You are stakeholders of the Congress party…. listening to your voice and heeding it is imperative. Over the last few months, many of you have spared time to meet with me and discuss your views. For this I am grateful. (emphasis added)

He proceeded to present their views as his own, on questions such as environmental clearances, agricultural marketing, and labour laws. He pointed out that the recently formed Cabinet Committee on Investment had cleared some 300 projects with an investment of over Rs 5 lakh crores (Rs 5 trillion). “Sectors affected by delays in clearances such as power, petroleum and mining have been the biggest beneficiaries of this focused approach.” Yet it was not enough; he rebuked his own government for its tardiness in attending to its stakeholders: “Frankly,” he said, “there are no excuses for the length of time required to clear some of these projects. We are a fast moving economy. We cannot allow you to be held back by slow decision making.”

The next day, the Environment Minister was sent packing (though she herself had been installed in July 2011 precisely in order to clear projects faster than her predecessor). For good measure, the Petroleum Minister was given additional charge of the Environment Ministry, ignoring the obvious conflict of interest involved in clearing projects of his own ministry.[5] That gentleman has proceeded to clear projects at an even more hectic pace.

AAP’s plea falls on deaf ears
The newly-born Aam Aadmi Party (AAP)  too tried to convince big business of its pro-private sector ideology. In his speech to the Confederation of Indian Industry (CII), Arvind Kejriwal laid out his economic perspective: that it was not the job of the Government to do business, nor even development (vikas); rather, it was business people who were creating wealth and employment for the nation; the Government should merely provide security, justice, and corruption-free governance. Instead what we see, he claimed, is that businessmen are being “harassed and persecuted” by the income tax department and the police (“Even an inspector of the income tax department can make a big industrialist miserable”). He called for doing away with the “inspector and license raj” and other such “interference” with business, for taxes on business to be reduced and stabilised, and for policies that “encourage” business. After all, “If businesses are closed then who will generate employment.”

On the face of it, these seem very similar to the policies being implemented since 1991: privatisation, deregulation and delicensing, reduction in taxes on the rich, and an overall pro-business policy regime. Indeed, Kejriwal presents himself as a more effective, honest implementer of the same policies: “The world’s best economic expert is our Prime Minister Manmohan Singh. During the last 10 years of UPA tenure, you saw best economic policies but the biggest drawback was lack of honest politics. As there was no honest politics, those economic policies could not be implemented.”

However, Kejriwal’s wooing of the corporate constituency failed, for two reasons. First, he pleaded that AAP was not against capitalism, but only ‘crony capitalism’. But he was addressing a body of precisely the principal beneficiaries of unprecedented gifts of natural resources (often at huge, uncompensated environmental cost), gargantuan subsidies to the corporate sector, rigging of tariffs, and so on. These are features of what has misleadingly been labeled ‘crony capitalism’, as if it were some deviation from the norm, but which is no more than actually existing capitalism, the norm of development of the big bourgeoisie in the present era.[6] These are the very people who have been lobbying furiously for even more such gifts, and for the removal of all legal restraints on such gifts, in the name of reviving ‘growth’. They could only have smiled at Kejriwal’s attempt to paint them as persecuted producers striving to create jobs and earn an honest penny. Rather, Kejriwal’s attacks have targeted a number of the biggest firms in India, including Reliance, the Tatas, the Adanis, and DLF; since hardly any large firm has clean hands, such attacks perturb them as a class. Thus, irrespective of the wishes of AAP leaders, they as yet meet with disapproval from the big capitalists.

In other circumstances, big business might have treated Kejriwal’s talk as mere rhetoric; after all, all parties claim to be against corruption and ‘crony capitalism’. The other important reason Kejriwal’s plea fell on deaf ears was that big business wants a “strong” Government, and the prospect of AAP attracting some of the anti-incumbency votes, and thus weakening Modi, disturbs them. Why is big business so keen on a “strong” Government? The reasons have been stated in many places, but they are neatly summed up in a recent statement by a big business forum, Assocham.

Candid presentation of corporate agenda
According to Assocham, “the prospects of a highly fractured mandate look real and that would not be a good development for the economy, ironically at a time when we are getting desperate for a turnaround”. For the measures desired by big business are unpopular measures: to slash spending on the people, and not raise taxes on the corporate sector and the wealthy. The Government will need the political strength to ram this through in the face of popular opposition: “While the country has learnt to live with coalition governments in the last 15 years, it would require a strong anchor party supported by smaller parties which are committed to a strong growth model.” However, a Government formed from a “fractured mandate” would not be up to the job. So, according to ASSOCHAM, “regional aspirations and urge to go in for populist measures could create major road-blocks.”

On the one hand, there would be increasing expenditure due to populist and mega schemes in the social sector, on the other, the taxation kitty would not be robust enough in the face of slowdown…. Irrespective of the party or a coalition of parties forming the new government, any marked departure from reforms measures that may involve some hard options like capping subsidies, could create ruptures in the economy and push it on the precipice again.

Indeed there is direct competition for fiscal resources between the people and the corporate sector:

India Inc, which itself is facing headwinds of very high debt in several sectors like real estate, telecom, wind energy, capital goods and  infrastructure projects, would have its own expectations from the new government. The industry would need a big push from the new government in terms of reviving manufacturing and investment in the big ticket infrastructure projects requiring large scale financial debt…However, only a strong government will be able to come out with a credible blueprint.

Standard and Poor, the US-based credit rating agency, similarly warns the Indian electorate that its failure to give a single party a clear majority will be punished by international capital:

 the direction and pace of policy reforms in India, more than which political party takes control after elections, will have a bearing on the sovereign rating…. An important factor is how fragmented the government will be. The more parties involved in the next coalition government, the more likely policies will be incoherent and less supportive of credit attributes.[7]

‘Mandate’ – for an attack
Foreign capital and Indian big business in fact want a ‘strong’ Government in order to clear roadblocks set up not only by popular opposition, but even by the courts, the CAG, environmental authorities, and the like. These involve precisely the questions of what AAP calls ‘crony capitalism’. In ASSOCHAM’s words,

on several issues like corporate debt restructuring, easing of environment rules, allocation of natural resources, the new government will have to take decisions since delays and rigid attitude has already cost much in terms of loss of economic opportunities. While the corporate India wants a transparent and clean government, the zeal to “clean up the system” may lead to policy hold up. Honest officers should be given protection in case the decisions taken in good faith turn out to be less gainful. Hindsight analysis is easier while decisions with foresight necessarily involve risks…..As long as these risks are taken in good faith, the bureaucrats and public sector bankers should be protected.

Deepak Parekh, chairman of HDFC, greasy eminence of big business, similarly bemoans the case filed by the Kejriwal government against Reliance Industries Ltd (RIL), petroleum ministers who favoured RIL, and the former Director General of Hydrocarbons who rigged things in favour of RIL. “What is happening is not good for India,” he lamented. “Why would any bureaucrat or a minister take a decision?… This will slow down decision making, slow down growth and development.”[8] When ‘growth’ is dependent on gifting public resources to the private corporate sector, public questioning of such gifts naturally amounts to an obstacle to ‘growth’.

The real import of Assocham’s (and big business’s) view is this: a large “popular mandate” is needed for the Government to force through measures which have faced public questioning and popular resistance. In Assocham’s candid view, then, the parliamentary process has little to do with democracy or voicing popular aspirations; rather, its purpose is to provide a stamp of legitimacy for an attack on the people. For this job, the corporate sector now clearly views Modi’s credentials as superior, both because he is in a position to take advantage of the anti-incumbency wave against the Congress, and because he has shown he has the stomach to use force and inspire fear.

Big business deserts old faithful Congress
And so, despite the best efforts of the Congress government, despite its long and carefully nurtured ties to the corporate sector, its corporate backers have deserted it en masse. The rupture began, remarkably, with the man who once referred to Congress as “apni dukaan”, namely, Mukesh Ambani. A detailed article in the Economic Times[9]  provides a vivid picture of the relationship between the country’s richest man and the two leading parliamentary parties. Ambani has been displeased at the inefficiency of the UPA government (both UPA-1 and UPA-2) in promoting his interests, in particular the UPA’s failure to shut down investigation of Reliance Industry Ltd’s (RIL’s) illegal actions, and its delay in increasing the price of RIL’s gas. In both cases, in fact, other forces and individuals which played the main role: for example, the Comptroller and Auditor General (CAG), members of the CPI, CPI(M) and AAP, other experts in the field of energy, the fertiliser and power industry, and sections of the media all played a role in exposing RIL’s misdeeds and in building opposition to the price hikes. Nevertheless the Congress government did eventually do the job for RIL: it set up a committee to recommend a doubling of the gas price, appointing a petroleum minister who behaved like an employee of RIL, and so on. Regardless, according to the Economic Times report, Ambani had decided by the 2009 elections itself to shift its support to the BJP.

According to the report, RIL’s key link to the BJP in the last few years has been Parimal Nathwani, RIL group president (corporate affairs and projects). Nathwani was elected to the Rajya Sabha from Jharkhand with the support of 18 BJP legislators. The Congress took note of this development, and replaced petroleum minister Murli Deora (referred to as the Reliance minister for petroleum) with Jaipal Reddy, who was hostile to RIL. Senior Congress leader Motilal Vora told the Economic Times that during the state assembly elections at the end of 2013, “Congress took no money from Mukesh Ambani, Reliance Industries or any entity connected with them.” “Our leaders don’t use RIL planes for travel any more”, said a Congress leader who has known the Ambanis for a long time.

A front-page report in the Times of India[10] tells us the Congress is facing a

severe funds crunch, which has put it at a further disadvantage vis-a-vis a resurgent BJP. A Congress heavyweight told this paper, ‘Between Congress and BJP, they are getting 90 per cent of the money, we are getting just 10 per cent’…. conversations with Congress candidates and their managers over the past week indicate that the ruling party has, for a change, been vastly outgunned by the BJP, and may actually be running on half-empty. ‘I have seen several Lok Sabha and assembly elections, but the financial deficit the Congress is facing this time is unprecedented’, says a veteran Congress MP….

Leading business houses, and sectors that are flush with cash like real estate and mining, are this time almost fully behind the BJP. Half of the 48 Congress-NCP candidates in Maharashtra that Times of India spoke to admitted as much…. Though the Congress has been in government in Mumbai for 15 years, a party leader confessed, ‘Even we are feeling it.’

As the Times notes, there is a visible difference between the election campaigns of the two leading parties:

Saffron is daubed all over – on billboards, bus stand shelters, kiosks and newspapers – forming the backdrop to the smiling visage of Narendra Modi. When you don’t see him, you hear him on the radio and on your phone. Indeed, rarely has the country seen such an election advertising blitz. In comparison, the Congress appears in bits and patches.

Union Minister for Industry and Commerce Anand Sharma alleged that the BJP had obtained more than 80 per cent of the hoarding corners throughout the country. “They have given advertisements to all the 714 channels, all the major newspapers. Look at the airtime they have consumed. Unless the media organisations have given them the space out of charity, where has all the money come from?” Sharma put the cost of the BJP campaign at Rs 10,000 crore.[11] Union Minister for Law Kapil Sibal estimated the total cost of some 15,000 hoardings put up by the BJP all over the country at Rs 2,500 crore, and the the budget for TV spots on various channels at between Rs 800 to Rs 1,000 crore. He put the cost of Modi’s rallies at hundreds of crore, including the organisation of special trains, thousands of buses and SUVs, gizmo laden stages under 30-ft dynamic screens with scores of LED screens, besides the cost of the event management company.[12]

No politician likes to mention an even more important head of expenditure than advertising: Namely, the outright purchase of votes (see “The Economics of Parliamentary Politics”[13]). It is here that the cash crunch will be most sharply felt.

Congress leaders are now more openly expressing their hurt and resentment at this corporate betrayal. Sibal told an interviewer: “The pink papers are with Modi. You know that, the corporate sectors are with Modi. They are fueling his campaign…. They want freebies from Modi as he has given them in Gujarat. That’s why they are backing him that’s why this all is happening.”[14] Elsewhere, he talked in terms usually used by Marxists: “Those who funded will seek favours. The rich will demand rich returns. There is no free lunch. The nation will be on sale. This is a party for the rich, by the rich.”[15]

Changed tone of Congress campaign
Late in the day, in April, the Congress leaders changed the tone of their campaign. Earlier, as we saw above, the young leader of the Congress had attempted to win over corporate chiefs with an explicitly pro-corporate agenda. The Congress tried to present itself as the original pro-corporate party. When Modi declared his economic policy, Anand Sharma accused Modi of “stealing” the UPA government’s economic vision and policy agenda: “Mr. Modi is just repackaging what the UPA government has already been doing.”[16] More recently, Chidambaram called the BJP manifesto “a copy, not even a cut and paste job. It is a copy of our ideas. It’s not wrong to copy but they should acknowledge.”[17]

But as it became clear to the doomed Congress that it had nothing to lose, its reigning family started harping on class questions. “The only way India is going to move forward is through a partnership that includes both the interests of business as well as the interests of the poor. If you try to construct a Government that focuses only on business or focuses only on the poor, you will not take India forward,” said Rahul Gandhi in an April 23 interview. Adopting Kejriwal’s language, he criticised Modi’s “crony capitalism” and affirmed that “Forward thinking, progressive business interests are firmly behind us,” pointing to IT czar Nandan Nilekani.[18] At a rally in Mumbai on April 21 he said that Modi’s model “was meant for development of the rich, while it neglects the common man, labourers, farmers and women.”[19] In Gujarat on April 26 he declared: “The [Gujarat] model is all about snatching the rights and lands of farmers and giving them away to such businessmen.”[20] In Latur on April 14 he called the Gujarat model a “toffee model”, one in which the BJP doled out toffees to businessmen.[21] In Chandigarh, Sonia called the Gujarat model “exclusive, discriminating against the poor and favouring select industrialists at the cost of the public.”[22]

However, this rhetoric has come much too late to benefit the Congress. It is hardly convincing to attack the “toffee model” in Gujarat while having distributed toffees for the last decade at the Centre. Those who live by cash must die by cash.

Moreover, even as they maintained large subsidies to the corporate sector, the Congress rulers have sharply cut welfare expenditures in the last two years – a near-suicidal adherence to the instructions of international credit rating agencies which has certainly deepened the economic slump and heightened ‘anti-incumbency’ sentiment. It is true that the new incumbent in place of the Congress may be even worse for the people, but the electorate does not know that from its direct experience.

While the Congress’s anti-corporate language and complaints regarding BJP’s money power may not help the Congress much, they do offer a telling portrait of India’s parliamentary democracy, from within.

Corporate sector alarm at new Congress rhetoric
The Congress’s new rhetoric may be shallow and tardy. But it has alarmed the corporate sector and its media. Noting that Rahul Gandhi had attacked concessions not only to Adani, who is closely identified with Modi, but to Tata as well, Business Standard warns him against anti-corporate rhetoric:

Mr Gandhi shouldn’t confuse cronyism and pro-business policies…. the problem arises when such accusations acquire the tone and character of a general attack on incentives for business that are not preferentially doled out only to the favoured few. It is important to distinguish between business-friendly economic policies for industry to revive investment and crony capitalism, where the government favours specific business houses with special concessions – often in return of political support from them. Mr Gandhi should focus on specifying how certain decisions of the Gujarat government smacked of crony capitalism, instead of allowing his criticism to be seen as an attack on the idea of pro-business policies altogether.[23]

In an April 25 editorial titled “Monkey Business”,[24] the Times of India warns: “Anti-private sector sloganeering in elections should not carry over to the next government.” It is alarmed that anti-corporate rhetoric is getting a response from the people, with longer-term implications:

What has been surprising is the traction that anti-business rhetoric has gained. The question is whether this is just election-time bombast or whether it will spill over into the post-poll phase, weighing down the economic policies of whoever heads the next government. The latter scenario would be very worrying….

Although global conditions are becoming a little less hostile, taking domestic advantage of these headwinds will require substantial course correction. Stalled projects need to be cleared, coal linkages sorted, manufacturing needs morale boosters, and so on. The new PM will have to hit the ground running. As even a cursory study of pre-1991 vs post-1991 history showcases, the partnership of a resurgent private sector will be indispensable….

The Times does not maintain the illusory distinction between ‘crony capitalism’ and capitalism as such:

Congress and AAP accuse the Gujarat development model of crony capitalism when it comes to allotment of land to industry. Whatever the accuracy of their maths, these accusations sidestep the fact that governments all across the world facilitate land acquisition for infrastructure projects and other big investments. This is true from China to the US.

As we noted in an earlier piece[25], the norm in recent years was for the corporate sector to fund the major parliamentary parties more or less equally. The current corporate sector’s desertion of the Congress is thus a remarkable phenomenon. Not since the days of Indira Gandhi till the mid-1970s has the corporate sector plumped so decisively for one party.

This shift indicates the desperation in the corporate sector. The underlying sickness of India’s political economy has surfaced once more in the form of paucity of demand – not only paucity of mass demand, which is a continuing factor, but even that of middle and upper class demand, which grew rapidly with the earlier bubble-growth of the economy. Mired in recession, the corporate sector in India, and foreign investors behind it, actually demand more State intervention, not less. They want land, other natural resources, and public sector assets at throwaway prices, in the face of mass resistance. They want the continuation of, and even increase in, giant subsidies to itself. They need the State to rig tariffs in its favour. They demand the encroachment of yet more vulnerable sectors to corporate capital. And they want the State’s strong arm to tackle an increasingly restive working class.

29 April 2014



[2] Quotations in this paragraph are from:, B. D’Mello, “It’s in the (Indian) air, smells like semi-fascism”,, and

[3] For example: Indira Hirway, “Partial View of Outcome of Reforms and Gujarat ‘Model’,Economic and Political Weekly (EPW), 26/10/13; Indira Hirway, Neha Shah, “Labour and Employment under Globalisation: The Case of Gujarat”, EPW, 28/5/11; R. Nagaraj, Shruti Pandey, “Have Gujarat and Bihar Outperformed the Rest of India? A Statistical Note”, EPW, 28/9/13; Maitreesh Ghatak, Sanchari Roy, “A Look in the Mirror”, Outlook, 31/3/14,


[5] Interestingly, the present Petroleum Minister, Veerappa Moily, was brought into the Petroleum Ministry to replace Jaipal Reddy, who was proving an inconvenience to Mukesh Ambani. As such Moily is now on a dual rescue mission.

[6] The term ‘crony capitalism’ is misleading; the blame for features intrinsic to capitalism in general is shifted to some alleged ‘distortions’ of capitalism. In particular, the term is used to describe developing countries, who have supposedly not absorbed the market discipline and rule of law required for real, non-crony capitalism. Thus ‘crony capitalism’ in the Southeast Asian countries is blamed for the 1998 crisis there, not those countries’ integration with global capital in the preceding decade. The truth is: in the US itself, the ‘revolving door’ between Wall Street and the US Treasury is common knowledge, and political ‘lobbying’, scarcely distinguishable from bribery, is a $9 billion industry that employs an estimated 1,00,000 lobbyists: See


[8] “India Inc against political witch hunt”, Times of India, 17/2/14.

[9] Rohini Singh, “RIL-Cong-BJP: The real story of 3 power centres”, Economic Times, March 4, 2014

















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