Rural voters deal blow to BJP at the polls as its boasts of India’s economic growth ring hollow

BENGALURU – Strong economic growth meant little to millions who are in distress in Prime Minister Narendra Modi’s India.

India’s powerhouse economy expanded 8.2 per cent in the 2023 financial year, extending similarly robust top-line growth numbers in the preceding few years.

But this failed to be a vote-winner for the ruling Bharatiya Janata Party (BJP) in the 2024 general election – particularly among the poor and the middle class.

Despite India being the world’s fastest-growing economy and home to some of the world’s wealthiest people, the nation’s economic success has not raised the living standards equitably and, in some instances, worsened income inequalities.

For this, Mr Modi’s incumbent government paid the price. 

The BJP’s greatest losses in the election that ended on June 1 came from rural India, which was a stronghold for the BJP-led National Democratic Alliance (NDA) in the past two terms.

The NDA lost 44 rural seats in 2024 from its tally in 2019, most noticeably in the northern states of Uttar Pradesh, Punjab and Haryana, and in the western state of Maharashtra, where surveys registered discontent among farmers and young people. 

Farmers from the three northern states had mounted huge protests in 2020 and 2021, demanding better crop prices and opposing farm laws passed without consultation. After a long stand-off, Mr Modi was forced to withdraw these laws.

There have also been millions migrating to cities across India searching desperately for meaningful work. Those who managed to return to their home towns seem to have voted for politicians who spoke directly to their situation.

The Congress-led India bloc gained 77 rural seats with an election campaign focused on job creation and improving farmers’ incomes.

So, while Mr Modi and the BJP will return to power for a third straight term, the party saw its majority reduced to 240 seats this year – well below the 272-seat threshold needed to form a government independently in the 543-seat Lok Sabha, or Lower House of Parliament.

“The results show that bread-and-butter issues continue to define the lives of the majority of people in the country,” said economics professor Jayati Ghosh from the University of Massachusetts, Amherst. 

In the aftermath of the Covid-19 pandemic, especially, individuals and businesses in rural India have been struggling with rising prices, unemployment, lower crop yield and income inequality.

While India’s poorest 50 per cent saw their collective share of personal wealth stagnate at 6 per cent from 2014 to 2022, the richest 1 per cent saw their fortunes soar from 30 to 40 per cent, according to the World Inequality Lab.

On June 4, as the vote tally trickled in throughout the day, street vendors such as Mr Ram Bharose saw brisk trade outside the Congress party headquarters in New Delhi, where crowds had swelled by evening.

Mr Bharose, 45, was happy not only with his sales of panipuri, a savoury snack, but also with the election outcome in his home-town constituency of Badaun, in Uttar Pradesh.

He expressed delight that the candidate for Samajwadi Party, a key Congress party ally, had claimed the seat this time after losing to the BJP in 2019.

Many of the most vulnerable poor, who belong to the constitutionally protected underprivileged castes and tribes, deserted Mr Modi for the opposition. In 131 constituencies reserved for tribal and lowered caste groups, the BJP’s tally went from 77 in 2019 to 53 in 2024, while increasing for the Congress party from 11 in 2019 to 33 in 2024. 

“Lower castes or tribes are not populous enough to influence entire wins, but other backward castes and Muslims also voted for the India bloc in these reserved constituencies,” said sociology professor Sumeet Mhaskar from O.P. Jindal Global University in Haryana. 

The loss was down to not only an anti-incumbency effect against the BJP after a decade’s rule, but also concerns that giving the BJP-led alliance the 400-seat majority it campaigned for would give it the power to amend India’s Constitution to cut special job and education quotas for backward communities.

Rural distress has been increasingly visible, with real rural wages contracting in 25 of 27 months up to February, combined with rural inflation soaring higher than in urban areas for most months since January 2022. 

Net household savings also stand at a 47-year low. Savings shrank from 7.3 per cent of the gross domestic product (GDP) in the financial year 2022 to 5.3 per cent in 2023.

Professor Rosa Abraham, who teaches economics at Azim Premji University in Bengaluru, said: “With incomes stagnant, households are chipping away at their savings. People are increasingly relying on debt, using more of their income to repay them. There’s not much left to save.”

In September, India’s finance ministry said reduced savings and increased borrowing are “not a sign of distress, but pointed to confidence in the future employment and income prospects”. It said more people were borrowing to study or buy assets like homes and vehicles. Data, though, does not support their claims.  

Manufacturers of fast-moving consumer goods like soaps, biscuits and cosmetics, as well as those making tractors and motorbikes popular in villages, reported a decline in rural sales for at least a year.

Rural areas are also seeing a job crisis. More than 57 per cent of people said they were self-employed in the financial year 2022, compared with 52 per cent in 2017, which indicates a gap in formal job creation. Most of the self-employed are not start-up entrepreneurs but young graduates in low-paying gigs or doing home-based or unpaid farm work, clarified Prof Abraham.

The BJP had been confident that its welfare schemes like health insurance, concessional loans and free food grains and cooking gas would allay the income and job stresses enough to garner votes, but Prof Ghosh said these were “merely continuations or expansions of old schemes”.

She said the new government must take lessons from the ire of voters and create jobs and income to “address the frustrated aspirations of millions of young people – this must become the primary economic goal”.

Prime Minister Modi could extend a drive to fill the enormous number of vacancies in government jobs, which have attracted millions of applications. But his government will also need to rejuvenate ailing small and medium-sized companies that contribute 29 per cent to the GDP and half of the country’s exports, she added

The Prime Minister’s broader economic reform agenda through infrastructure creation, trade pacts and fine-tuning of manufacturing incentives will likely continue under the new government, said Ms Sumedha Dasgupta, senior analyst for Asia at the Economist Intelligence Unit. 

But “a chunk of business-oriented reforms” desired by investors and rating agencies – such as easing land acquisition, labour laws and privatisation – may take longer, “as targeted welfare commitments are likely to increase manifold” to allay rural economic concerns, she added. 

Prof Abraham noted: “Infrastructure investment and freeing up of credit for big corporations alone did not increase employment.

“Recognising the political fallout of its trickle-down approach, the government might do well to create a supportive ecosystem for small and medium-sized enterprises, which are India’s real job creators.”