Lok Sabha Elections 2019: How data is driving the polls this time

Unlike in 2014, when data in public eye mostly focused on corruption issues, including in allotment of natural resources, the 2019 polls have a data point for every segment of the Indian voter base

What is more likely to be on the mind of voters as they enter the more than a million polling booths for Lok Sabha elections 2019? Will it be the soothing data on inflation, the gradual build-up of assets, including houses with electricity and gas across rural India, or will they root for whoever holds out the most attractive version of the basic income scheme? 

Compared with the previous general elections in 2014, the 2019 edition has a data point to interest every segment of the Indian voter base. Five years ago, the data in public eye had mostly focused on the corruption issues, including in allotment of natural resources like telecom, coal and others. In contrast, data surrounding 2019 have been richer. There are no talismanic numbers this time around, yet there are numbers everywhere. The intensity of the debate around numbers does show that despite India’s weak 74 per cent literacy rate, political parties do believe these are powerful talking points with among voters. 

Within the data set, the most controversial ones are of course the numbers about the Indian economy in general, and not just those about gross domestic product (GDP). The Bharatiya Janata Party (BJP) is sure that it can profitably talk about data on cooking gas made available in rural areas or the number of young people who have benefitted from the Mudra scheme — both expected to wing them back to Raisina Hills. The Congress is keen to exploit the numbers on unemployment as its campaign theme. In a social media-rich campaign, these numbers are easy to flash and generate scores of talking points.

For instance, markets believe that the Indian economy has more good news to offer, especially compared with the rest of the world, while the high street is decidedly more sombre. These are again conflicting assessments, but voters are not complaining about having to wade through them.

Decidedly, the data-heavy discourse is more appealing than the emotional pitch of migration issues that has made for a messy Brexit issue roiling both Britain and the European Union (EU). It is also better than the on-off impeachment issues surrounding the US presidency. India has migration issues, too, especially in the Northeast, but those are not the key election agendas.

The Indian voter instead seems to be taking a lot of interest in data-driven issues as polls draw near, as this report [https://www.bloombergquint.com/elections/what-do-indian-voters-really-want#gs.36qd9e] from Association for Democratic Reforms notes. The markets have also taken note and interpreted those accordingly. In one month, the bellwether stock market index BSE Sensex has rallied over 5 per cent. The gains have continued this week despite last Friday’s spread between the short and the long end of the US yield curve falling below zero. It is the first time in a decade that this has happened. In other words, US investors possibly believe that it is now better to hold on to short-term profits than to chase long-term ones. That impression is usually the harbinger of a recession. 

When those happen, the US dollar becomes the safe haven along with gold. On Monday, spot gold prices rose by 0.66 per cent to close at $1321.8 per tonne. All other currencies are expected to fall, the extent depending on the health of their respective economies. The Indian currency (the rupee) has also moved down, but only marginally as of now. In the last one month, the rupee has gained rather than dipped against the dollar. Even the three-month futures for the rupee-dollar pair pegs the rupee at 69.61, below the 70 mark.

One of the reasons for the relative sangfroid could be oil futures. In a market downturn, oil futures tends to rise. But not this time. Crude oil at Nymex is trading at $57 a barrel, but, more importantly, the outlook for three months ahead also looks placid. The Organization of the Petroleum Exporting Countries (Opec) has decided to review stocks and, therefore, the prices only after summer. If the summer closes out with the clear signals of an impending US recession to bring to an end one of the longest booms in history, oil would stay flat. For India, soft oil prices mean lower imports spread cheer all round. 

Essentially, the Indian markets have to contend with an election but have more positives to push them along till the results come out. The foreign investors also think so. They have invested Rs 103.5 billion (net) in the markets in the past month; the domestic financial institutions have been more reticent at Rs 46.7 billion. As the chart shows, they are on the sidelines so far. 

In comparison, the high street is more worried. Inflation has moderated. Axis Bank estimates it will not go beyond 3.5 per cent till March 2020. But the industrial sector has also slowed badly, barely growing at 1.7 per cent in January, and shows no sign of a revival. “(Our) concern now is the unexpected capital goods slowdown, sharper than our expectations... This might have been due to slowing government capital goods spends in Jan 2019, and which is likely to slow even more in Feb and March” (sic),” says Saugata Bhattacharya, chief economist of Axis Bank. India’s largest automobile manufacturer Maruti is reported to have cut back production by 26 per cent in the January-March quarter, though the company has confirmed only a lower 8 per cent cut for February. Bajaj Auto has plans to cut back the inventory it holds. 

A telltale signal of the worry comes from the so-called fear index, or the India Volatility Index of the NSE. A higher number means the investors are fretting more. In the same one-month period since February 25, the index has risen to 18.9 per cent from 15.4. Some of those worries have to do with the spell of current meltdowns as companies are marched under the Indian Bankruptcy Code by banks. There are 1,484 cases that have moved through the liquidation process till now. Just twelve of those had a draw of Rs 3.45 trillion on the Indian banking system. This month, RBI announced a dollar-to-rupee swap window of $5 billion to mop up some of the money that would enter the banks from abroad as resolution payments for some of these “stressed assets”. And calculators are already out to figure what would be the tab on the new government for a basic income scheme. It is, clearly, a data-rich environment this election season.