The new year is barely a month old and, all of a sudden, it seemed the year 2019 was almost here. The end of December was the time of crucial state election results, and the beginning of February was the time of the last full-budget the this government. Both events came to be seen in the light of the next year’s general elections. The result is that nobody is talking of 2018; it is as if a zero year of sorts. Every commentator is talking of 2019 – notwithstanding a fact and an adage: The fact is that the Lok Sabha elections are a good 15 months away (going by the regular schedule); the adage, often attributed to former British PM Harold Wilson, is that even a week is a long time in politics.

The budget, then, is bound to be seen within a political framework. Thus, if there are sops for farmers, commentators attributed it to the farm distress and the BJP’s poor performance in rural Gujarat. This ignores two facts, that the farm distress was more severe in previous years than now, and that Narendra Modi has been wooing farmers right from the 2014 manifesto, with the promise to double their income by 2022. The same argument holds for the budget’s supposed stress on rural side, on health, and on the poor.

This social-sector script is highlighted more in the context of what the so-called middle class – the audience of the commentators, otherwise known as chatterati, has missed out. Income-tax sops, for example. Long-term capital gains tax has made a rude comeback after more than a decade, spooking the stock market and ruining the middle-class investor’s hard-earned savings.

The middle class, the narrative goes, is cheated: they voted Modi in, and now all they have got is one more percentage point of cess over tax.

This narrative of short-term economics is missing long-term politics. The essence of this budget can be captured in a single, short sentence: Modi is finally shifting the BJP’s social base.

Before we proceed further, let us clarify who exactly gets the ticket to this fabled middle class.

The ‘middle class’ in India is a misnomer. To define it, there are a whole range of income cut-off points to choose from. It is also like the case of first shooting and then drawing a circle around it: one can first pick the segment, and then choose the economic indicator to fit it.

In its recent report The Economist magazine found India’s middle class to be altogether missing. It was taking the definition of ‘middle class’ from the National Council of Applied Economic Research (NCAER) – earning at least ten dollars a day – to arrive at figure of mere 7.8 crore people in the middle class.

In response, NITI Aayog chief executive officer Amitabh Kant and his colleagues Vaibhav Kapoor and Ranveer Nagaich, writing in the Mint newspaper, estimated the size of the middle class to be nearly the double, at 15.8 crore. They based their argument on a paper by Sandhya Krishnan and Neeraj Hatekar in the Economic & Political Weekly, 2017. Their method is to consider the income bracket of $2-10 at 1993 purchasing power parity, and then look into the National Sample Survey (NSS) Consumer Expenditure Survey (CES) data.

Either way, however, it is consumerism that is considered the entry ticket to the middle class. Spending capacity might be a weak indicator to find out if somebody has finally made it out of poverty. Moreover, The Economist looked at India as nothing more than an MNC market, and found it missing. However, even when an Indian rises from the lower middle class to the middle middle class, he or she is not likely to spend money on fancy foreign brands as conspicuous consumption is a recent and limited import to India. Also, a number of Indian brands, from Haldiram to Patanjali, have made it big thanks to the rising spending capacity of an expanding middle class, but such brands do not figure in the British magazine’s scheme of things.

For a better of idea of who constitutes the middle class, we can instead turn to earning capacity, and tax payment as a broad indicator of it.

The number of taxpayers, especially after demonetisation, was a matter of some controversy last year, with commentators pointing out wildly differing figures in the prime minister’s address, the finance minister’s statement, a Central Board of Direct Tax (CBDT) press release and a finance ministry reply in parliament. The finance ministry issued a clarification on August 8 last year. Essentially, the final numbers are: “From the 1st of April to 5th August, 2017, 2.79 crore returns have been filed by Individual taxpayers as against 2.23 crore returns filed during corresponding period of last year. The number is expected to further rise significantly as many more taxpayers are still to file their returns.” However, 2.79 crore (and counting) is the number of tax returns, including so-called ‘nil returns’ – those who actually paid taxes number 2.05 crore in 2015-16, going by the CBDT data.

That is 1.7 percent of the population. When economist like Thomas Piketty and Joseph Stiglitz as well as activist-campaigners talk of the top “1 percent”, we need to remember that in India, that would roughly comprise the tax payers.  Counting out only the lowest among them (and, more importantly, counting in those bigwigs who may not figure in tax data). Even those counted out are still among the top two percent.

Yes, 2019 is in air – except when commentators criticise the budget for being harsh on the middle class and extra soft on villagers and the poor and the lower middle-class. They forget that the former is less than two percent and the latter more than 98 percent. When demographics are taken into account, the Bill Clinton campaign slogan of 1992 stands reversed: it’s the politics, stupid.

Time was when the BJP was the party of the middle-class; the party of the urban upper castes – in shorthand, pro-Hindu and the Brahmin-Baniya party. The time was when the BJP used to do well in the cities, though not as well across the board if you move to the hinterlands. Moreover, its influence did not exceed beyond the Vindhyas or across the river Karmanasha that divides Uttar Pradesh and Bihar and other eastern parts of the country. In hindsight, it can be said that it was wedded to a minimalist interpretation of its ideology, which found its best expression in the Ayodhya movement, and the party rested content with the social base it got from Hindutva. At best of times, this base gave it about 180-190 seats (as in the 1998, 1999 elections) – enough to wrest power if the allies also did well.

But a political party can’t build a long-term future depending on the same social communities. In his seminal work, “Party Building in a New Nation” (1967), which focused on the Congress party in post-independent India, American political scientist Myron Weiner pointed out, “A society with a high organisational capacity appears to be competent at creating industrial organisations, bureaucracies, political parties, universities and the like.” The Congress, on the vanguard of the freedom struggle, was not a political party in the realpolitik sense. After independence, it actually acquired more popularity and power – through expansion of its social base. Of course, it could not retain the same and had turned into a dishevelled and disorganised entity at the organisational level by the turn of the millennium. The party’s inability to capitalise on its own government’s welfare programmes in successive elections speaks volume about the decrepit organisational structure of India’s Grand Old Party.

For another proof of this theorem, consider 2004: the urban middle class which pitchforked the BJP to power walked away from it and voted the Congress in. The city-dwelling brahmins and baniyas, traders and the salaried class came to prefer the Grand Old Party over the BJP so much that in 2009, they give it a second term – so rare for any party/coalition in recent decades. In 2009, the Congress and its allies won convincingly in five of the seven metro cities – Delhi, Mumbai, Kolkata, Chennai and Hyderabad (Ahmedabad was of course with the BJP and Bangalore was in two minds).

Narendra Modi, whose rise as chief minister was initially fuelled by Gujarat’s urban upper-caste voters, knows the theorem too well. In fact, he has been working to expand the social profile of the BJP voter for far too long. Way back in 1995, when the BJP came to power for the first time in Gujarat, he was the state general secretary, and his energies were focused on expanding the party base. Ghanshyam Shah, eminent sociologist and expert on Gujarat politics, in his paper titled “BJP’s rise to power” (Economic and Political Weekly, 1996), describes how the party was able to co-opt various sections of society, including scheduled castes and tribes, in addition to the core base of the urban middle class. In Gujarat, over the years, the party has been consistently won over the Congress’s traditional support bases. The latest Gujarat election was of course an exception; but, on the other hand, Uttar Pradesh was not. The BJP’s mammoth majority, confounding all political experts, was thanks primarily to party president Amit Shah’s micro-managed outreach to a whole array of smaller castes and communities and promise to them of a share in power.

Watching the results of 2004 and 2009, Modi must have become even more sensitive to the imperative to take the party to newer segments of society. His own 2014 campaign was of course broad-based and not urban and Hindutva-centric. The impression that Modi got unstinted support of a ‘communalised’ middle-class across the country is eminently erroneous. The fact remains that the BJP under Modi’s leadership spread its influence across various segments of the non-Muslim society and turned them into a formidable support base. No doubt, the support of an aspiring middle class was critical in terms of creating a perception.
With the advent of Modi on the national scene, the party has been undergoing a silent metamorphosis, and expanding its presence across the country. The latest budget, in the final analysis, was an instrument to further that campaign.

Modi needs to shift the BJP’s social base not only because he has to address a far larger demographic group, but also because political parties rarely survive, much less thrive, if their social base remains static. That is why the party aims to bring into its fold a varied section of agrarian and subaltern society.

The question is, how will the budget proposals get translated into votes? After all, the Congress had tried similar experiments by bringing in laws like those for Right to Education and Right to Food, but failed to convert them into votes. Today, RTE and food security no longer seem relevant for popular politics.

That is where the difference between the Congress and the BJP comes in. Unlike the Congress, the BJP has of late honed it organisational machinery into an apparatus that works in tandem with the government’s plans and reaps political dividends to the maximum. Thus, the UP victory was, as noted above, primarily thanks to an expanded social base, but also due to the party cadre who delivered the message of the benefits of schemes like Ujjwala which provides free LPG connection to the marginalised.

There is a marked difference in the politics of the NDA I under Atal Bihari Vajpayee and NDA II under Modi. When it comes to organisational matters, Vajpayee was a statesman-like leader concerned with only the larger picture and macro issues, while Modi is a hands-on man on the mission. In his role as the prime minister, he never gives organisational issues less priority than issues of governance. That is why he chose as the party president Amit Shah, who has been creating a robust organisational apparatus to work in tandem with the government. During Vajpayee’s time, the government and the party were often seen working at cross purposes. That is not the case during Modi’s term.

Perpetually in the election mode, the BJP is set to launch a vigorous campaign to reach out to the masses and it will highlight the benefits of social welfare schemes which the budget has proposed to initiate. Since these schemes aim to cover nearly half of the population, the government and the party is confident to retain its front-runner status in the run-up to the 2019 elections. The substantial shift in the social bases is bound to radically transform the BJP internally and make it a strong political organisation compatible with the government – somewhat like the Congress in the early decades of independence.

ajay@governancenow.com

(The column appears in the February 28, 2018 issue)