Economic Growth

What’s at stake in India’s elections?

Pranjal Sharma
Contributing Editor, Businessworld

As India prepares for national elections in a few weeks, the key political issues are crony capitalism, falling economic growth, rising unemployment, lack of basic facilities and poor governance. And that is the good news.

Identity politics has won elections at the national level, but growth and governance issues have not. One ruling coalition lost an election in 2004 despite a campaign that focused on its development achievements. The loss was more because of political alignments, but parties misread it as a vote against development.

The return of growth and governance to the centre of political debate is sorely needed. India was targeting annual GDP rate of 10% in 2009. This year, it will barely touch 5%. With a disruptive election year, 2014-2015 is unlikely to be better.

The resulting distress in the industry and the disgust among voters has driven national political parties to focus on the growth agenda. A key objective for the new government will be to stem domestic industrial production, which has turned negative. More than reviving business sentiment, improved industrial activity will be critical for creating employment.

Any domestic company that still has the energy and impulse to expand is looking beyond India. At the World Economic Forum Annual Meeting in Davos this year, many Indian industry leaders I met were planning global investment at the cost of domestic growth. The next government that takes charge of New Delhi in May this year will have to tackle this problem as a priority.

Poor governance and a lack of transparency have taken a severe toll on India’s growth momentum. Poor governance began from the Parliament. The current term of the lower house, Lok Sabha, has been assessed as the poorest based on performance parameters. Lok Sabha functioned for only 60% of its time compared to previous terms where it worked at above 80% levels.

The ruling coalition and opposition parties remained deadlocked throughout the five-year term while more than 70 changes in legislation could not be approved. Administrative lethargy has led to slow decision-making at executive level. Scores of critical infrastructure projects await clearances affecting billions of dollars of investment. Opaque government processes that allowed questionable allocation of natural resources led to charges of corruption, further adding to inertia in decision-making.

Creating transparent procurement and allocation rules will have to be another key priority for the new government. Established political parties are being accused by newer, younger parties of nurturing crony capitalism. Such accusations have eroded civil society’s trust in industry. Transparency in policy-making will be essential to bridge this divide.

In the last two years alone, half a million young Indians joined the ranks of the unemployed. Joblessness is higher among youth than the national average. Rising job worry has led to a shrinking consumer base and fall in demand.

As political parties jostle for power to run the largest market-based democracy, they will have to ensure that the aspirations of 285 million young Indians are met. These millions will not be satisfied with empty rhetoric. They will forcibly demand growth and governance political parties. Whoever is committed to these is likely to win the elections.

Author: Pranjal Sharma is a consulting editor at Businessworld in India and a Member of the World Economic Forum’s Global Agenda Council on India. Follow on Twitter @pranjalsharma

Image: A girl peeps out of an emergency window of a passenger train at a station in the western Indian city of Ahmedabad REUTERS/Amit Dave
Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Stay up to date:

Geo-economics

Related topics:
Economic GrowthFinancial and Monetary SystemsGeo-Economics and Politics
Share:
The Big Picture
Explore and monitor how Financial and Monetary Systems is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

A lesson from democracy’s record year: ‘vibes’ mean more to voters than GDP

John Letzing

December 6, 2024

How 'green education' could speed up the net-zero transition

About us

Engage with us

  • Sign in
  • Partner with us
  • Become a member
  • Sign up for our press releases
  • Subscribe to our newsletters
  • Contact us

Quick links

Language editions

Privacy Policy & Terms of Service

Sitemap

© 2024 World Economic Forum