The Key to India’s Biggest Election? Jobs, Jobs, Jobs

(Bloomberg Opinion) -- Voting has begun in crucial state-level elections in India which will shape Prime Minister Narendra Modi’s choices for the remainder of his second term in office. Of the five states going to the polls, one clearly matters more than the others: Uttar Pradesh.

UP, as it is called, has a population larger than Brazil’s. Many Indians see the sprawling state as the historic and spiritual heartland of the country; an overwhelming majority of the nation’s prime ministers — including Modi himself — have been elected from constituencies in UP. The state sends 80 representatives to India’s 543-member parliament — more than twice as many as any other, barring Maharashtra. How UP residents vote matters more than any other variable in Indian politics.

For the last five years, the state has been ruled by Modi’s Bharatiya Janata Party. Indeed, Modi’s strong appeal in UP is the main reason he has won back-to-back parliamentary majorities, something no prime minister has done since the 1970s. That popularity will be tested in the ongoing polls, which conclude on March 10, even if Modi himself isn’t on the ballot. A loss or even an unexpectedly narrow win would dent the aura of invincibility that has until now been the prime minister’s most potent political weapon.

While the run-up to these elections has been marked by a disturbing spike in hate speech targeting religious minorities, which way UP goes will probably come down to one thing: its struggling economy. The BJP hasn’t had much luck improving the state’s prospects in the last five years. Its per capita income in PPP terms remains lower than Zimbabwe’s and is barely higher than Haiti’s.

Unemployment and underemployment are rife. In January, Uttar Pradesh and the neighboring state of Bihar suffered what one Indian newspaper called “India’s first large-scale unemployment riots” after more than 12 million applications came in for 35,000 low-level openings in state-run Indian Railways. Infuriated demonstrators claimed that college graduates were unfairly being hired for jobs that required few skills.

Modi’s original pitch to India’s populous hinterland when he began his run for prime minister almost a decade ago was that he would turn India’s poorest provinces into Gujarat, the prosperous coastal state he had ruled for three terms. And indeed, the BJP government has put a lot of effort into upgrading UP’s highways and other infrastructure, hoping as in Gujarat to attract companies to set up factories in the state. If re-elected, the party promises to intensify that effort, building six new metros, five new express highways, two new international airports and 25 new bus terminals.

But it is many times harder to create jobs in states such as UP and Bihar than in Gujarat, which has a long coastline and a history at the center of regional trade. As with any other development story anywhere in the world, including China, jobs and factories are most likely to grow along India’s coasts. These are places far better connected to the world than UP but where wages are still low and opportunities for investment exist.

UP has many problems other than a lack of connectivity, of course: Administration, law and order, and governance are all weak. Still, we should recognize that, even if all those problems were miraculously solved, it would be a strange investor indeed who would set up a new factory a thousand kilometers away from the nearest deep-water port.

A government with a grasp of economic reality would focus on creating jobs for the people of Uttar Pradesh, not jobs in Uttar Pradesh. It would emphasize educating the state’s workers, enhancing their healthcare, providing them a solid social safety net — and then ensuring that they are able to move back and forth for work easily and painlessly. The open migration that laborers from the Indian hinterland take for granted should not be underestimated; it’s a right their counterparts in China are in many ways still denied.

Yet politicians in UP, rather than implementing this sensible program, promise instead that they will end out-migration by expanding the public sector or building more airports. They’re fighting hundreds of years of economic history. I wouldn’t bet on their chances of succeeding.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mihir Sharma is a Bloomberg Opinion columnist. He is a senior fellow at the Observer Research Foundation in New Delhi and head of its Economy and Growth Programme. He is the author of "Restart: The Last Chance for the Indian Economy," and co-editor of "What the Economy Needs Now."

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