Is Bengaluru's economy the reason Karnataka votes this way?

Discussions soon after an election tend to be influenced by rhetoric, especially when the election has thrown up catchy phrases like “PayCM” and “40% sarkara”. The corruption implied in these phrases is a convenient peg on which to hang multiple points of economic distress in Karnataka. And as the assembly election in the state has just shown, it is a very effective campaign tool.But to treat corruption as the explanation for the economic distress that has impacted the results in Karnataka’s assembly election would be to miss the wood for the trees. The results point to a much deeper problem in the post-liberalisation Indian economy, a problem that is not confined to Karnataka.Since 1991, there has been an unstated consensus that we must have growth at any cost, after which a part of the benefit can be transferred to the poor. Karnataka has been at the forefront of this approach.The pattern of growth that emerged, with policy support, was focused on Bengaluru, particularly the information technology component of the city’s economy. When the Bharatiya Janata Party (BJP) government came to power, Bengaluru already accounted for well over a third of Karnataka’s economy and the share has grown further since then. The Basavaraj Bommai-led government continued with policies that made it more difficult for the rest of Karnataka to find a place in Bengaluru’s expansion. medium100232716Those forced out of agriculture in rural Karnataka did not have the qualifications needed to find a place in Bengaluru’s growth. And those who did make it had to cope with the high cost of transport and other essentials of a worker’s life. This raised the minimum wages at which workers would be available in the city. The Bommai-led government tried to offset some of this higher labour cost to industry by making 12-hour workdays legal.The BJP government may have been happy that these changes in labour conditions did not generate the debate they should have. But it left them unprepared for the vote in the assembly election against the Bengaluru-centric growth-first model.This is starkly evident in the distribution of the seats won by the BJP this year when compared to its performance in 2018. In the 28 seats of Bengaluru, which benefited from the BJP’s growth-at-any-cost model, the party saw a rise of nearly 50% in the seats it won. In the rest of Karnataka, which paid the price of the model, the BJP saw its seats drop to nearly half its 2018 tally.The Congress was quick to recognise the extent of this distress. It is being said that this is a result of what Rahul Gandhi heard during the passage of the Bharat Jodo Yatra through Karnataka. And some of the five guarantees they made, especially the payments for graduates, have the touch of the Gandhi family.But the guarantee on rice is in line with the welfare schemes offered by the earlier Siddaramaiah government. Taken together, the promises targeted at specific points of distress did better than the fewer, and more general, welfare promises of the BJP. The guarantees not only helped the Congress tap into anti-incumbency against the Bommai-led government, but also helped it eat into the support of Janata Dal (Secular).While the guarantees may have brought electoral success, they do not mark a break from the larger strategy of first growing at any cost, and then transferring a part of the benefit to the poor. All that they do is offer an increasing share of the benefit of growth to those facing economic distress. Generating the resources to provide this greater share will be a challenge. medium100232722Bengaluru-based personalities who have been, or are, associated with the IT industry have already launched a social media campaign against the use of taxpayer resources for these guarantees. It is too early to say whether this campaign will succeed or will only generate a counter-demand for the IT industry to return some of the subsidies it has received, particularly in terms of land.But it is important that the debate goes beyond social media barbs to the larger issue of the viability of the growth-at-any-cost model. Have the political costs of this model been the reason for no government in Karnataka being re-elected since the coming of liberalisation?To make matters worse, the model may be approaching the point of diminishing returns, if it is not already there. The decreasing cost effectiveness of the city will affect its global competitiveness. And if the Congress tries to correct this decreasing competitiveness by offering investors more working hours per week, as the Bommai-led government did, it can expect the same fate.The pro-poor political strategy of the Congress would thus depend on its ability to generate an effective growth strategy that is more sensitive to its social costs. This will reduce the need for subsidies, even as it increases the resources to provide them.Rahul has announced that the Congress will make the five guarantees into policy in the first cabinet meeting of its new government. The new chief minister’s immediate response will have to be an accounting one, where he transfers resources from other sectors. But if the guarantees are not to become an albatross around the neck of the new government, it will have to find a growth strategy that allows for the participation of a wider range of people, especially those outside Bengaluru.The writer is dean of social sciences, National Institute of Advanced Studies, Bengaluru.