The Political-Economy of Black Money in India

The sparks flying over the Indian political firmament in connection with the disclosure of the names of illegal foreign bank account holders have obscured a crucial aspect of the profoundly important issue of black money in India. This aspect is only peripherally related to the question of who is likely to be included in the list of more than 600 names submitted by the government to the Supreme Court – that question may have some curiosity value but not much else beyond that. Rather, the crucial aspect I refer to is connected with the very dynamics of black money generation in India. Even more importantly, I believe, attention needs to be diverted away from black money stashed abroad to black money stashed within India. I believe this reorientation of attention will take the discourse beyond petty and unseemly party politics. It will also spare us the usual and predictable mud-slinging that various party spokespersons indulge in on Indian news channels.

The recent displeasure expressed by the Supreme Court in connection with the black money issue has been an embarrassment for the government (See Hindustan Times). However, I do believe that the court’s charge that the government was providing a protective umbrella to black money holders was a bit harsh. As of now, I have no reason to doubt the government’s sincerity in pursuing those who have illegal foreign bank accounts. Arun Jaitley’s statements, in an interview with Barkha Dutt on NDTV, had a ring of honesty to it (See NDTV). 

If the government was not interested in providing anyone with a protective umbrella, why was it keen on releasing names of foreign bank account holders in a small trickle? My conjecture is that the government wished to play out the release of these names in the manner of a long drawn out TV serial: it would release a tranche of names every time it needed to embarrass its political opponents. My reasoning for this conjecture comes from the same interview of Jaitley with Barkha Dutt referred to earlier. Jaitley had a smile write large on his face when he said that Congress will be embarrassed when the next set of names of foreign bank account holders is revealed. It was the look of one who has seen the next episode of the TV serial and wishes to titillate the audience by dropping this nugget of information. Alas, the Supreme Court would have none of that: it had been sufficiently incensed with the UPA for its lethargy on the issue and, unfortunately, the NDA had to face the flak. The court was in no mood to wait for the drip-drip of foreign account holders’ names to be released as per a schedule determined by the government. Rather than wait for the slow crawl towards a climax, as is the wont of TV serials, the court wanted the denouement of the black money saga to be revealed in the first episode itself!

One thing is certain from the government’s run-in with the Supreme Court: the BJP has found out that being in government is more difficult than being in opposition. It should have also found out that success does not come with good intentions alone. There is many a slip between the proverbial cup and the lip. The process of bringing back these illegal funds parked abroad is fraught with numerous onerous responsibilities on the part of the Indian government. These responsibilities may be given short shrift only at the cost of incurring the non-cooperation of the countries with which double taxation avoidance treaties have been signed. While in opposition, the BJP could afford to pour ridicule and scorn on the UPA for pointing out the stringent conditions involved when revealing the names of illegal foreign bank account holders. Given the extremely low credibility of the UPA government in the aftermath of the various scams, any mud flung at it was bound to stick. Unfortunately, the boot is now on the other foot.

The Congress and other losing parties of the 2014 elections now have the luxury of hurling criticism at the current government. The NDA government, however, still has its Teflon coating intact: given its clean image, hardly any mud hurled at it tends to stick. Nonetheless, the NDA finds itself in a problem of its own making. No one had compelled the BJP to make the grand promise of getting all black money back to India within a hundred days of assuming office. That promise, unfortunately, has now come back to haunt the party, giving the Congress an opportunity to grab the moral high ground while taunting the BJP with the “we had said the same thing about the binding double taxation treaty clauses” refrain. Anyone who has read the double taxation treaty agreement with Germany (See here) would know that the UPA was right in being circumspect about revealing names in public. The UPA’s position then and the NDA’s position now are identical. 

Should the BJP have raised expectations regarding bringing black money back to India so high? It is quite obvious that such high expectations can rarely be fulfilled. Modesty is a virtue in most walks of life including politics. But, in the last days of the previous government, the BJP’s stock was so high that it felt itself invincible. It had captured the imagination of almost the entire country and the electorate, with fervent hope, hung on to the vision of development that was put forward by the party. With such a commanding position and presence, it did not take long for hubris to take hold of the party. Pride, they say, comes before a fall (or a stumble, as in this case). The Supreme Court admonishment is, of course, not such a great disaster. Hopefully, a lesson will have been learnt by the government and we might, probably, not see such a misstep again.

Reverting to the issue raised at the beginning of this note, studies have shown that possibly far greater amount of black money is lying within the country than has been stashed abroad (See Economic Times). So, why not go after black money that is located in India without being hamstrung by the issue of confidentiality that is involved in the various double-taxation agreements? 

Kapur and Vaishnav point out the importance of black money in Indian politics, especially during elections. Indian political parties are estimated to have spent Rs. 30,500 crore (1 crore = 10 million) during the 2014 general elections (See NDTV). Just prior to the elections, the Election Commission of India had raised the limits on expenditure by a candidate for a parliamentary constituency to a maximum of Rs. 70 lakh (1 lakh = 100,000) with the limit being lower for smaller states (See Business Standard). Given that there were 8251 candidates in the 2014 parliamentary elections (including candidates from unrecognized parties as well as independent candidates) (See Election Commission of India) and assuming all candidates in all states spent the same amount (i.e. Rs. 70 lakh each), the maximum legal expenditure for these elections should have been Rs. 5,776 crore. If the NDTV amount mentioned above is to be believed, actual expenditure was over 5 times the legal amount. More specifically, the Congress with 464 candidates should have spent a legal maximum of Rs. 325 crore and the BJP with its 428 candidates should have spent a legal maximum of Rs. 300 crore. Even the most ardent supporters of these parties will admit that these amounts are laughably low. Is it a surprise then that neither the BJP nor the Congress have submitted details of their elections expenses to the Election Commission of India as of October 2014 (See The Hindu)? Where did these additional funds that were spent by the political parties come from? The major source of these funds is believed to be the real estate sector. Shah and Pandey estimate that real estate sector accounts for 10% of India’s GDP of $ 2 trillion and of this 30% of transactions of all property transactions use black money. Bearing this in mind, Kapur and Vaishnav propose, test and verify a link between the real estate sector (as a generator of black money) and political parties. 

Is there a way out of the black money mess that India finds itself in? There are two ways of doing this. The first is to indulge in the cops and robbers game which both the UPA and the BJP have been playing while trying to uncover illegal foreign bank accounts. The problem with this is that there may not be a neat separation between the cops and the robbers: at least some cops may be helping the robbers or, worse, maybe robbers themselves! However, if the incentives for generating black money remain intact, this cops and robbers game is a mere palliative. At best, it provides excitement to the public, talking points to loud-mouthed TV anchors and fodder to political parties to go after each other. The second and, unfortunately, the more complicated approach is to change the incentive structure for the generation of black money. The economic reforms introduced in 1991 brought about such a major change in this incentive structure. The amelioration of the rigours of the license-raj system and curtailing the discretionary powers of the bureaucracy and the government substantially reduced the avenues for black money generation. However, Gowda and Sreedharan point out that “economic liberalization has not ended the government’s discretionary powers over resource allocation in numerous domains” (See Gowda and Sreedharan). The Government of India White Paper on Black Money identifies sectors which are still susceptible to black money generation. These sectors are real estate, finance, bullion and jewellery, mining and other natural resources and equity trading. Since the government still holds substantial discretionary powers in these sectors, select individuals or groups are able to “buy” favours from government. This ability to buy and sell favours provides powerful incentives for the generation of black money, a large part of which is possibly diverted for financing election campaigns.

The problem at the heart of the black money problem is the nexus between those who receive discretionary favours (private business in the sectors listed above) and those who provide these favours or even those who lobby for these favours on behalf of private interests (the polity in general with a central role for the government). Unless this nexus is broken, there is little chance that the primary cause of black money generation will be nullified. But who will bell the cat? Given the enormous amount of resources that are required to fight elections, can we expect political parties to slay the goose that lays the golden egg? In the absence of a policy which reforms the electoral system (e.g. public funding of elections has been proposed as a solution), we the electorate might as well sit back and enjoy the show-biz of illegal foreign bank accounts being played out on the 24-hour news channels.

Show Me the (Black) Money

The more things change, the more they remain the same. A cliché, no doubt, but that is what came to my mind when the NDA government informed the Supreme Court that “…it cannot disclose such details [about tax evaders] given by countries with which India has double taxation avoidance agreement (DTAA)” (see here). To remind those who might have forgotten, this is what the UPA Finance Minister, Pranab Mukherjee had said some time back “The government has names of Indian account holders in Liechtenstein's LGT Bank and information given by German banks, but the government cannot reveal the names right now because of the secrecy clause” (see here).

One still remembers the tirade launched against the UPA government by the BJP in the years leading up to the elections of 2014:

• L.K. Advani in 2011: “The Congress-led UPA government is functioning in a dishonest manner by not making public the names of those who have stashed black money abroad...Congress fears it will be exposed as most of the illegal money belongs to the party leaders” (Economic Times).
•  After this, Modi picked up the same issue and, being a master of demagoguery, went even further: “Advani Ji is only seeking repatriation of black money, but only the Congress is getting the current. Why does the Congress not want to bring back black money? Is it because it belongs to them?” (DNA India).
• Yashwant Sinha promised that the BJP would reveal names of all tax evaders who have stashed money abroad if it came to power. Referring to double taxation treaty he stated: “…these names have been with the Government of India for the last two years. They say that the double taxation avoidance agreement prevents them from disclosing”; and further “The question is why you haven't been able to prosecute them in two years. Disclose 10 names, 20 names, but how does [sic] all these 800 names remain a secret for two years. That is where there is some mystery…” (Hindustan Times).

The storm-troopers of the BJP in the social media went after the UPA with all their might. Using the most vituperative language, all UPA leaders, including the Prime Minister Manmohan Singh, were reviled and torn to pieces. Alas, the chickens have now come home to roost. The NDA is using the same reason as the UPA for not revealing names.

Of course, in this embarrassing imbroglio, the Congress still has to be blamed for this so as to keep pure the well-cultivated image of the NDA. Finance Minister Jaitley has already set the ball rolling by stating: “Tax pact signed by Congress government in 1995 with Germany is constraining Centre from declaring names of persons having black money account” (Times of India). 

Article 26 of this agreement with Germany reads as follows: 

ARTICLE 26 - Exchange of information - 1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions (emphasis added).

The segment in bold above is the offending item which has prevented the government from disclosing the names of tax evaders.

Are we to understand that a Cabinet Minister in Modi’s government did not know provisions of this agreement? If he did, all the earlier rants against the UPA, before and during the elections, were just show-biz designed to hoodwink the electorate into thinking that the UPA had something to hide. Of course, if Jaitley – a high profile lawyer – did not know the provisions of the law, then surely the competence of the minister should be questioned. The agreement with Germany from which I have quoted above has been in the public domain for a long time. I found the location of this information and the relevant article in about 15 minutes of search on the internet. Who, in his or her right mind, can possibly believe that the NDA did not have access to this information?  This, of course, means that all the BJP leaders quoted above (Advani, Modi and Sinha) were being dishonest in their criticism of the UPA government. My own belief is that the BJP all along knew perfectly well that the double taxation avoidance agreement prevented the government from disclosing details of tax evaders; at the very least it must have known all this from the time it assumed power. But it chose to keep quiet about this lest it dilute its propaganda against the UPA. After all, the UPA had to be vanquished not only at the Centre but also in Assembly elections, especially in Maharashtra. Is it just a coincidence that the government gave this information about the non-disclosure clause to the Supreme Court after the elections had concluded in Maharashtra?

Now, as this tragi-comedy unfolds, I wait for some sign of contrition from the NDA government: contrition for having unfairly targeted the UPA; contrition for having misled the electorate on a matter of grave importance for the Indian economy; contrition for the smoke and mirrors of instituting an SIT at the behest of the Supreme Court when it knew all along that genuine progress would hit the wall of double taxation treaty.

Will the storm-troopers of the BJP pause to think of what has happened and how they have been misled? Well, storm-troopers are useless if they begin to think on their own, so I doubt that will happen.

Should I hold my breath, waiting for this sign of contrition from the NDA government? I think I will choke long before that happens, if at all.

Mr. Modi Goes to Washington

If TRP ratings for TV programmes were provided for the period September 26 2014 to September 30 2014, I have very little doubt that TV News Channels (whether English or other Indian languages) will receive higher ratings than the usual channels, whether these be film or sports or entertainment channels. And it would all be due to one person who has, probably, caught more eyeballs than any contemporary world leader: Narendra Modi, Prime Minister of India. No Indian leader, since 24-hour news channels began, has captured the air-waves in this manner. Mr. Modi’s agenda has been filled with very high profile meetings in New York city culminating in a couple of meetings with President Obama in Washington as well as a joint article with the President in the Washington Post. It is obvious that the USA attaches great significance to this visit by a man who was once denied a visa.

The pièce de résistance of Mr. Modi’s USA trip has undoubtedly been his Madison Square Garden (MSG) speech (though the event itself was very poorly organised with very ordinary dances and even worse rendering of the Indian national anthem). Mr. Modi’s oratory skills were on full display during the general elections, but the MSG event was different. During the elections, he had to vanquish a foe using his speaking skills. Here, he had to use those skills to move an audience already in love with him. It was very skilful and clever how Mahatma Gandhi – not exactly the darling of the Sangh parivar – was co-opted, instead of the usual favourites like Sardar Patel or Swami Vivekananda, to woo US-based Indians. The consummate performer that he is, Modi had the audience eating out of his hands and knew exactly the buttons to press to move the crowd, often to hysteria. But such adulation has its risks since expectations raised so high can easily turn to impatience and extreme disappointment. The risks are high since the announcements (can these be called promises?) made by Modi were bold in the extreme. The merger of OCI and PIO cards, while certainly helpful, is not path-breaking. The intention to merge the two cards was announced by the UPA in 2012 (See here). The headlines grabbing announcements were (a) providing toilets for all and cleaning the river Ganga within five years and (b) providing homes for all by 2022. The latter is reminiscent of the unrealistic overreach in the slogan of ‘Garibi Hatao’ (remove poverty) coined by Indira Gandhi. While no one can doubt the laudable vision behind these promises, feasibility of such endeavours must be established. It is not clear to me what the total resource cost of these objectives will be or how these resources will be garnered to bring this vision to fruition. I find it surprising that, in the euphoria of Modi’s performance, questions regarding the implementation of such bold promises have not yet been raised. Like the audience at the Madison Square Gardens, even veteran TV anchors covering the Modi visit seem mesmerised and have forgotten that healthy scepticism is a virtue as far as journalism is concerned.

The US administration has always accorded very cordial receptions to Indian Prime Ministers going right back to the time of Jawaharlal Nehru. During the last 30 years, most Indian Prime Ministers have been honoured by White House State Dinner. The White Historical Association states:

A state dinner honouring a visiting head of government or reigning monarch is one of the grandest and most glamorous of White House affairs. It is part of an official state visit and provides the president and first lady the opportunity to honour the visiting head of state and his or her spouse...It is an event that also showcases global power and influence.

In the last thirty years, the following Indian Prime Ministers have been so honoured:

1. Rajiv Gandhi when Ronald Reagan was in office
2. Atal Bihari Vajpayee when Bill Clinton was in office
3. Manmohan Singh when Barrack Obama was in office.

Further, four Indian Prime Ministers in the last thirty years have addressed a joint session of the US Congress: Rajiv Gandhi, Narasimha Rao, Atal Bihari Vajpayee and Manmohan Singh (See here). Mr. Narendra Modi’s Washington DC visit is relatively low key with neither a state dinner nor an address to a joint session of the US Congress. But then not every Indian Prime Minister received this honour during the first visit to the USA. Mr. Modi’s initial meeting with President Obama has been quite like the first round of a boxing match between two heavy-weights, with much circling round each other, gauging each other’s strengths and weaknesses before making any long-term commitments. However, it was quite extraordinary that there was no joint press briefing by the two leaders at the end of their talks. Instead, a closed room briefing was preferred with no members of the press present. Was this done to avoid uncomfortable questions of the two leaders? This might well have been the case given that international press would have not pulled their punches unlike their Indian counterparts, which have become quite meek over the last few months.

President Obama and Prime Minister Manmohan Singh – possibly the only two intellectual heads of state in the last 25 years – shared a special relationship built on Obama’s charisma and intellect which had carried him to White House and Manmohan Singh’s accomplishments. These accomplishments include his great track record as a bureaucrat/administrator par excellence, as India’s finest Finance Minster and his tremendous achievements as Prime Minister, especially with respect to the high rates of growth of the Indian economy over his entire tenure (possibly barring the last two years) and shepherding the Indian economy through the ravages of the Great Recession. At a personal level, there need not be any animosity between Obama and Modi since the original denial of a visa to him took place when Bush was President though the situation was not altered even after Obama assumed office. The general perception about Modi’s track record as the Chief Minister of Gujarat and his impressive victory in general elections of 2014 certainly provide him the strength and credibility to meet Obama on an equal footing.

Meetings between heads of state certainly make for a certain spectacle and provide the “optics” – a word that has recently become very dear to many TV analysts and anchors –, the question that must be asked is: what specific purpose do such meetings serve? The purpose of such meetings may be divided into political and economic benefits gained by each country. Political benefits, while undoubtedly important, are not easily measurable. Economic benefits, on the other hand, can be quantified to some extent and this is what I propose to do. While there can be many measures of economic benefits – foreign direct investment, migration into the USA from India, for example – I will only focus on trade. What I will try to examine is whether there was a change in the rate of growth of exports from India into the USA and rate of growth of imports from the USA into India before and after a Prime Ministerial visit to the USA. Given the data that are available, I consider the following visits:

1. Rajiv Gandhi’s visit in 1987
2. Narasimha Rao’s visit in 1994
3. A.B. Vajpayee’s visit in 2000 and 2001
4. Manmohan Singh’s visit in 2008 and 2010

Details of the data that I have used and how the growth rates were computed are given in the Appendix. The Appendix also gives details of the statistical results. A summary of results for Indian exports to the USA and American imports into India is given below:

1. Rajiv Gandhi’s visit did not have a significant effect, either on the rate of growth of exports or on the rate of growth of imports.
2. Narasimha Rao’s visit had an impact on both exports and imports with both rates of growth increasing significantly after his visit. One could say that Indo-US trade as a whole received a strong boost after his visit.
3. A.B. Vajpayee’s visits had no impact on Indian exports but rate of growth of US imports into India increased significantly after both his visits. This would imply that India’s balance of trade (export earnings minus import expenditure) would have worsened after Vajpayee’s visits.
4. Manmohan Singh’s visit of 2008 led to a significant increase in the rate of growth of Indian exports while there was no impact on imports. His second visit had no discernible impact on either Indian exports or imports. This would imply that India’s balance of trade improved substantially after Manmohan Singh’s visit of 2008 while the second visit seems to have had no impact.

The simple analysis carried out in this note shows that Prime Ministerial visits, apart from their political and diplomatic importance, have significant economic impact as well. As Mr. Modi winds up his trip to the USA, there can be little doubt about its political and diplomatic significance. The economic impact of his visit will play out over the next few years. Mr. Modi has aggressively promoted the ‘Make in India’ agenda with the objective of making India an attractive destination for manufacturing. Labour reforms – a political minefield – are being discussed. Simplification of bureaucratic procedures is in the offing and overbearing laws and regulations are being pruned. All of these changes were listed out by Modi, almost as promises, to the audience at Madison Square Garden. There is consequently a palpable feeling of hope and expectations among those who heard the speech. Corporate honchos in India have expressed the belief that these changes will significantly improve the environment for doing business in India. If the above changes do indeed materialise we should be able to see the following in the near future:

• Improvement in India’s ranking for ‘Ease of Doing Business’ as measured by the World Bank. Currently, India ranks a dismal 134 out 189 countries.
• Consequent to Mr. Modi’s visit to the USA, foreign direct investment (FDI) from that country should start flowing into India. The level of FDI from the USA for 2012-13 stands at $ 478 million way behind FDI from the UK ($1,022 million), Japan ($1,340 million) and the Netherlands ($1,700 million) (See RBI).

Mr. Narendra Modi’s Washington and New York sojourn has sowed the seeds of change that may transform India. We now wait, with bated breath, for the green shoots of rejuvenation of the Indian economy to emerge.

APPENDIX

Trade data are sourced from the United States Census Bureau. We use data from Exports from India, Imports into India and India’s Balance of Trade.

A trend equation, with intercept and slope dummies, is estimated from each Prime Ministerial and each Presidential visit.

Table 1

Impact on Indian Exports after Prime Ministerial/Presidential Visits

Visit by PM or President	Growth rate of Exports before visit (% per year)	Growth rate of Exports after visit (% per year)
Rajiv Gandhi’s visit in 1987	4.84	No significant change
Narasimha Rao’s visit in 1994	8.85	8.85 + 2.35 = 11.20
A.B. Vajpayee’s visit in 2000	10.47	No significant change
A.B. Vajpayee’s visit in 2001	10.25	No significant change
Manmohan Singh’s visit in 2008	10.95	10.95 + 5.84 = 16.79
Manmohan Singh’s visit in 2010	10.71	No significant change
Bill Clinton’s visit in 2000	10.46	No significant change
George Bush’s visit in 2006	10.75	No significant change
Barrack Obama’s visit in 2010	10.73	No significant change

Table 2

Impact on Indian Imports after Prime Ministerial/Presidential Visits

Visit by PM or President	Growth rate of Imports before visit (% per year)	Growth rate of Imports after visit (% per year)
Rajiv Gandhi’s visit in 1987	-5.47	No significant change
Narasimha Rao’s visit in 1994	4.76	4.76 + 8.38 = 13.14
A.B. Vajpayee’s visit in 2000	6.01	6.01 + 10.67 = 16.68
A.B. Vajpayee’s visit in 2001	5.79	5.79 + 10.59 = 16.38
Manmohan Singh’s visit in 2008	8.66	No significant change
Manmohan Singh’s visit in 2010	9.06	No significant change
Bill Clinton’s visit in 2000	6.01	6.01 + 10.67
George Bush’s visit in 2006	7.16	No significant change
Barrack Obama’s visit in 2010	9.43	No significant change

READING THE TEA LEAVES: Recent Bye-elections in India

The recent bye-election results where the BJP lost in many constituencies has brought forth a flood of analysis.  None of these has been wholly convincing and much that has been spoken on the news channels has seemed like divining an explanation from the pattern of tea leaves left behind in a teacup. Before I plunge into my own analysis of the bye-elections, the question to ask is whether the results we have just seen are very different from the results of past bye elections.

In the table below, I confine my attention to bye-elections (both parliamentary and assembly) held within roughly six months of general elections. I look at the bye-elections performance of the leading party of the coalition which won the preceding parliamentary elections.

Year of General Elections	Lead Party in Winning Coalition	Number of Bye-Elections	Bye-Elections Won by Lead Party in Winning Coalition
1999	BJP	31	9 (29%)
2004	INC	46	16 (35%)
2009	INC	83	21 (25%)
2014	BJP	51	18 (35%)

The results of the Table suggest that the performance of the BJP in the recently held bye-elections has been similar to such performances in the past. There does seem to be a tendency for the lead party to lose bye-elections held immediately after general elections. But there is one important difference: none of the lead parties in the elections of 1999, 2004 and 2009 had performed as well as the BJP had in 2014. The point has often been made but it’s worth repeating: the BJP won a majority on its own in 2014 unlike the INC in 2004 and 2009 or the BJP in 1999. In light of such exceptional performance by the BJP in the general elections in 2014, it is intriguing that it suddenly lost favour in many of the bye-elections held recently. This would have made sense if the BJP had committed some horrible blunder since forming the government in New Delhi. That is clearly not the case. In fact, the BJP government has done little wrong till now. Prime Minister Modi himself has been very dignified in his role so far. I don’t quite agree with the criticism that the Modi-magic has faded. It well might fade over the next few years but I don’t think that has happened just yet. Still, I do find amusing the strenuous efforts of the BJP spokesman (Nalin Kohli on NDTV) to protect Modi from any blame for the defeats in the bye-elections. As always, in India, the top leadership can never be blamed for poor electoral performance. In any case, the point I would like to emphasise is that there has been no reason for voters to have been disillusioned by the performance of the BJP.

Have the opposition parties suddenly been rejuvenated? The Congress still seems to be in complete shambles and, with Rahul Gandhi reluctant to take on any kind of responsibility, the party is bereft of any obvious leader. Some have suggested that it is the very absence of the Gandhis in the campaign for the bye-elections that might have helped the Congress. This might well be the case, but we might need to have the Gandhis remain absent from the next few elections to verify this hypothesis. Likewise, not much has changed as far as the Samajwadi Party is concerned. How could a party which was so reviled during and immediately after the general elections suddenly stage a comeback? 

Is it possible that the BJP suffered from over-confidence? Was the party hoping to ride on the momentum of the general elections results to see it through the bye-elections? My feeling is that there might have been some amount of over-confidence on the part of BJP, both, in its own ability, and in the lack of it among the opposition parties. The fact that none of the stalwarts of the BJP campaigned in the elections seems to point towards the possibility that these elections were perhaps taken lightly. I am, of course, discounting the whispers about some top leaders (e.g. Rajnath Singh) being miffed that their relatives were not selected as candidates. Certainly, the BJP’s biggest asset – Narendra Modi – was also missing in the campaigning. If the BJP suffered because of Modi’s absence, then this excessive dependence on him must be a cause of great worry for the party. With a full time day job as Prime Minister of the country, Narendra Modi will obviously not have the amount of time for campaigning that he had during the general elections. BJP will have to win with its B-team led by Amit Shah.

The final issue I want to touch on is the platform on which the bye-elections were fought. The general elections of April and May 2014 were fought on a strong platform of development and Modi never once wavered from it during the campaigning. What exactly was the electoral platform during the bye-elections? Was it governance, fight against corruption and development once again? If it was, none of it made any news. An important problem for the BJP was that its favourite punching bag – the Gandhi family and the failings of the UPA government –, that was so effective during the general elections, had now become irrelevant. A new target was required for their campaign and they reverted to the dangerous communal strategy. Thus, the ridiculous ‘love jihad’ campaign was conceived, which garnered much (adverse) publicity for Yogi Adityanath, BJP’s main propagandist in Uttar Pradesh. Since the Uttar Pradesh campaign was in the exclusive hands of Amit Shah, it is safe to assume that he had approved the ‘love jihad’ agenda of the rabid Yogi. This is where I begin to have serious misgivings about the BJP. Handing over the entire reins of the BJP’s electoral campaign to Amit Shah, who had fallen foul of the law even during the general elections, is a recipe for disaster. He might still win the forthcoming assembly elections for the BJP, but his presence runs completely against the development agenda that Narendra Modi and other BJP leaders have adopted for their government. It is in this context that another disturbing thought comes to mind and that is Modi’s acquiescence in the campaign run by Yogi Adityanath. By all reckoning, the ‘love jihad’ campaign contradicts the mantra of Sabka ka saath, sabka vikas that Modi has espoused so energetically since coming to power. Modi’s effort at inclusiveness is further reinforced in his recent interview with Fareed Zakaria on CNN where he has been so strong in his support for the Muslim community that it would warm the cockles of the most ardent secular person’s heart. Given Modi’s style of functioning, which generally involves micromanaging as well as enforcing tight control over his colleagues and administrators, I cannot believe that Modi was unaware of the kind of campaign being run in Uttar Pradesh. Why then did he not put a stop to the regressive and puerile ‘love jihad’ nonsense that was being spewed out? His silence has been deeply disappointing and disturbing to all those who might have supported his secular development agenda and those who would have voted for him in the fond hope that divisive politics, as represented by the Hindutva groups, was a thing of the past.

Likewise, Rajnath Singh’s apparently smart comment “What is ‘love jihad’?” was absurd. Something is seriously wrong if the home minister of the country has no information about such a divisive campaign being run by his own party. Even if he were derelict in his duties as home minister, surely, as a member of the RSS, he would have known about the campaign (See here). 

In conclusion, I have to confess that I am no closer to an answer as to why the BJP performed poorly in the bye-elections. There are many possible reasons, all with some element of truth. If I had to, I would focus on two possible reasons (apart from the fact that all leading parties perform poorly in bye-elections):

1. Modi has been and will remain a significant contributor to the BJP’s electoral fortunes but he was not available for campaigning in the bye-elections. Since he is unlikely to be available for campaigning even in future elections, the BJP will have to come up with a reliable B-team if it is do well in the absence of Modi as the lead campaigner.
2. The secular development platform had served the BJP well in the general elections and also attracted to their fold voters who did not share the religious and divisive agenda of the Hindutva parties. The BJP moved away from this platform in the bye-elections and possibly paid the price for this deviation. If the BJP is to consolidate the electoral gains of the general elections, Prime Minister Modi will have a huge role to play in keeping the BJP to the straight and narrow path of development for all.