Revolutionizing Indian Elections: The Surprising New Factors That Could Determine the Next Government

According to the report, there are three emerging factors that are expected to exert a significant influence on election outcomes: stock market investors, social media users, and first-time voters.

Traditionally, Indian elections have been characterized by the phenomenon of anti-incumbency, wherein the ruling party is often viewed as being at a disadvantage. However, Morgan Stanley, a prominent US-based financial services conglomerate, presents a distinct perspective in its recent analysis of India’s upcoming general elections.

The analysis introduces the concept of the ‘Force of Incumbency index,’ which posits that election results are primarily driven by the nation’s economic growth, particularly the prosperity cycle. In simpler terms, an increase in GDP tends to favor incumbent governments, whether at the central or state level.

The Force of Incumbency index is computed using data from every state and general election since 2002.

Key Takeaways:

According to Morgan Stanley’s research, three factors are poised to disproportionately impact election outcomes: stock market investors, social media users, and first-time voters. These groups have gained prominence due to their larger numbers and enhanced access to information in recent years.

For instance, the number of equity investors has increased over the past five years, with approximately 100-120 million voters now participating in the stock market. Moreover, more than 500 million Indians, nearly half of the country’s voters, are active on social media platforms, including 130 million first-time voters.

The report suggests that stock market investors, who have accumulated substantial wealth in the last five years, are likely to support the continuity of the current administration as it is perceived to ensure stability in the stock market. However, it acknowledges that there is significant diversity within these groups in terms of income, wealth, and social progress.

Meanwhile, farmers continue to constitute the largest voting bloc. Morgan Stanley notes a significant reduction in farmer suicides, decreasing from 17,000 in 2015 to less than 11,000 in 2021. Additionally, religious and caste groups have historically played pivotal roles in elections, but predicting their behavior in future elections remains challenging due to limited available information.

Factors Influencing Voter Decisions:

Other factors that influence voters’ decisions include poverty levels, farmer suicides, terms of trade in rural India, female foeticide, infant mortality, and government transfers. Encouragingly, there are signs of social progress in these areas.

  • Poverty, as measured by the Multidimensional Poverty Index (assessing health, education, and standard of living), has improved significantly in recent years, according to UNDP data.
    • Health indicators: Malnourishment has decreased from 21.05% in 2015-16 to 11.80% in 2019-21, while child mortality has fallen from 2.22 to 1.48 during the same period.
    • Education: The number of children deprived of schooling decreased from 11.62% in 2015-16 to 7.72% in 2019-2021.
    • Standard of living: Deprivation rates for essential amenities like cooking fuel (13.90%), sanitation (11.29%), drinking water (2.66%), electricity (2.08%), housing (13.61%), and assets (5.60%) have significantly reduced by 2019-2021.

Geographical Trends:

The report highlights key geographical trends that will shape the upcoming elections. Uttar Pradesh and Maharashtra are expected to play pivotal roles in the 2024 election outcome due to their significant contribution of 128 seats, nearly a quarter of the total 543 elected representatives in the Lower House.

Pre-poll alliances in these states could impact the results, given the presence of regional parties. Tamil Nadu, especially considering the BJP’s limited presence in the previous elections, and Bihar, with a fragmented political landscape, are also states to watch closely. West Bengal is anticipated to witness a direct battle between the BJP and the All India Trinamool Congress.

The report emphasizes the significance of alliances in political parties and highlights the emergence of the 26-party alliance I.N.D.I.A as a noteworthy development. The alliance’s success will depend on its ability to distribute seats effectively before the elections.

Additionally, five state elections are scheduled in the coming months in Mizoram, Telangana, Rajasthan, Madhya Pradesh, and Chhattisgarh. The outcomes of these state elections could influence market sentiment leading up to the 2024 Lok Sabha elections. However, the report notes that using state election results as a reliable predictor of general elections has yielded contradictory results in the past, with examples like the BJP’s performance in 2018 and 2003 serving as illustrative cases.

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