Three Reasons why MOST voters are not feeling Achche din yet

In our Modi Hits and Misses analysis, we had listed an impressive array of successes from Mr. Modi. Still, it seems opinion polls are not showing a seat share gain. It might all change closer to the election but one must understand why the ‘Hits’ narrative is not easily breaking through in favour of the BJP. Here are a few charts that indicate how the average voter must be thinking.

Incomes are Growing at a Slower Pace

One learning from the recent State elections is that voters value income growth and those that are affected by income growth are more likely to shift their voting than those who are not affected by income growth . For example, Farmers, Agricultural Labourers and even Urban Labour are not seeing substantial Income growth. The negative inflation in Agriculture is evident and Labour wages have grown at a very slow pace in most Hindi Heartland States (due to excess supply of labour).

Further, the argument about lower inflation is not making headway because voters are still complaining about inflation.  See this chart from CSDS in the Outlook Magazine

This is kind of strange given the lower headline inflation rate. Many supporters share prices of numerous items that appear to have clearly fallen over the last 4-5 years or have not increased by much. Food inflation has genuinely fallen but perhaps the basket of goods has changed for many voters. In fact, Healthcare and Education Inflation is at a 5 year peak (may be more).

Ironically, while the PM’s health insurance scheme is benefitting many, it may also be increasing costs of healthcare to many who are not covered by health insurance and live in healthcare supply deficient regions (Hypothesis). GST too may be increasing costs of both healthcare and education (Hypothesis). Until recently, the surging oil prices had significantly inflated LPG prices. This has now fallen. Either way, it is likely that Many voters are not seeing the benefits of inflation as their incomes are growing at lower pace while their basket of goods has Food as a smaller share in comparison with other items like energy, transport, education and healthcare.

The last major factor is Housing. Contrary to popular opinion, most Indians have houses of their own (not commenting on quality or location). Housing therefore forms a significant proportion of household wealth (about 60%). Even if the house was never going to be sold, an ever increasing price of self occupied home offers a sense of security.  So what happened to housing?

Housing prices went up marginally between 2014 and 2018, even negatively (for example in Delhi). In most cities, 4 year growth has hovered around 30%+_ (which is about 7% a year)

In comparison, housing prices boomed between 2007 and 2013. In many cities, 6 year growth was about 100%,  (which is about 15% a year or double of recent years)

All of the above reasons is why Rajasthan C-Voter data shows a peculiar pattern.

Females Vote Swing for BJP :  + 2.6%

Males Vote Swing for BJP: (- 8%)

Females and specifically poor rural women are directly benefitting from LPG, Electricity and Toilets at home. Men on the other hand are worried about their faltering incomes, reducing pace of wealth growth and their ability to give a better life to their Children through higher education. The narratives are quite clear, question is how does each party play these narratives.