The 2019 General Election: Who Will Lead India to a US$5tn Economy?

India’s general election, the ‘world’s largest exercise in democracy’, is now underway with the first votes in a multi-phase process cast, with result to be announced on the 23rd of May. While opinion polls are projecting a wide range of outcomes, they currently favour a win by the incumbent BJP and its leader, Prime Minister Narendra Modi. If elected, Mr. Modi would be entrusted with the responsibility to lead India during one of the most critical periods in the country’s history. Following nearly two decades since India’s initial economic liberalisation, during which the country has seen strong, if volatile growth, India today is on the cusp of entering a new phase of growth that will take the country from US$3tn GDP this year to $5tn by the next general election in 2024. During this period, the country is set to undergo massive economic, political and social changes, and India’s next government will need to be the steward of this transformation for the country to meet its full potential and to assume a position commensurate with its rise in global significance. India’s likely trajectory over the next decade paints the backdrop against which both major parties in this election should be determining their government manifestos, driving important priorities like deepening reforms, attracting capital, increasing transparency and removing obstacles to growth. However, both the BJP and Congress appear to have incorporated these factors to only a limited extent in their public pronouncements, pursuing more traditional election strategies largely built around identity politics, recent track records, and criticism of their opponents. While they may have taken the view that these are the tactics that will lead to electoral success, India’s next government will ultimately need the vision and execution capabilities to steer India’s continued rise during its next phase of growth. Importantly, India’s growth and transformation are also leading to increasingly significant changes in Indian society, driving the growth of a rising new electorate, whose demands are closely tied to drivers of India’s rise, and who will extract the price from leaders who fail to be trustworthy stewards of that rise.


India’s General Elections: Current Polls

Opinion polls currently predict that Mr. Modi’s BJP-led National Democratic Alliance (NDA) will narrowly maintain its parliamentary majority and form the next government. The major opposition alliance, the United Progressive Alliance (UPA), which is led by the Congress party, is expected to bounce back from its historic low of 60 seats to 137 seats, however it is unlikely to come anywhere close to the NDA’s tally of 279 seats, with the balance of seats going to small independent regional parties (see table below for a summary of recent election polls). However, accurate polling in India is notoriously difficult and has proven to be unreliable historically. The range of the polls below, in which the NDA’s seat tally ranges from 225 seats to 310 seats (a 16% range in total seats) is evidence of this inaccuracy, but also highlight the wide range of electoral outcomes that currently seem possible.

The average poll result, however, seems to point to a BJP victory, potentially without the need to enter into a broader coalition, which would provide Mr Modi with electoral validation for the government’s performance during the past five years and provide a continued strong mandate to govern India for the next five. While India may therefore well see a continuity of government over a full decade, the country that government is ruling is set to undergo radical change during this period.


India’s Transformation Sets the Challenge for its Next Government

As laid out in a previous Sign of the Times , it took India fifty years following independence from British rule to scale to a US$1 trillion economy in 2007. The second trillion dollars of GDP, however, had been added by 2014, and the third trillion is on track to be hit this year. Furthermore, the compounding effect of India’s rapid economic growth means that these time increments will shorten yet further and, if the country can maintain a 7.5-8.0% GDP growth rate GDP, could hit US$5tn by the time of the next general election in 2024. Stepping back, India’s growth is unfolding in the context of several inexorable macro-economic drivers, namely India’s demographics (i.e. its young population), urbanisation, mass technology adoption, consumption growth and increasing financial inclusion. While these factors will continue to be the primary drivers of India’s growth moving forward, India’s overall trajectory in its ongoing development and rise to global significance can be split into three distinct phases:

  • Phase I: Hardship and Poverty (1947-2006), which corresponds roughly to the long and flat journey of its GDP to $1bn, marked by hardship and poverty;
  • Phase II: Economic Liberalisation and Participation (2007-2018), charting the volatile rise that has taken it to c.$3bn, marked by overall economic liberalisation and increasing participation, and;
  • Phase III: Rise to Global Significance (2019-2028), which will see India’s rise to global significance alongside continued and increasingly stable growth that will bring GDP to c.$8bn in the next decade, and potentially beyond.

India today is standing at the threshold of Phase III, which should see stable and rapid economic growth, and broader economic participation and wealth creation, enabled by increasing financial and technological penetration. India’s next government will need to be the steward of an unprecedented transformation in growth and development, and it will need to shape its priorities around the virtuous circle of drivers that are making it happen.

Alongside obvious priorities like implementing further structural reforms, continuing to fight corruption and improving transparency, India’s next government will need to remove obstacles to this cycle and be focused on promoting initiatives that leverage India’s core drivers. India’s next leader will need to steer the country and provide stability during a period of significant economic and social dislocation. Further, they will need to maintain the country’s security and international relations in a period of increasing geopolitical uncertainty, and establish India’s place in the world during its ongoing rise in global significance. So, while the incoming government may not need to be an architect of growth, it will need to be a savvy and determined enabler of that growth, the next five years are likely to bring momentous economic and geopolitical decisions, as well as domestic challenges, which will have an important bearing on India’s future position as an economic and geopolitical superpower. The task is clearly a tall order for any leader, let alone one of a democratic country of the vast scale and diversity of India. India’s ongoing transformation shines light on the real priorities over which the current election should be fought: inclusion, employment and education, infrastructure development, and the removal of growth impediments like corruption. The reality of India’s position has been recognised at least partially by the country’s electorate. Despite growth under Mr Modi having exceeded that under the previous Congress government (7.3% GDP growth vs 6.7%), the rate of job creation has been disappointing. Further, as the BJP has sought to manage inflation, this has led to falling price of agricultural produce, impacting the incomes of the 800m people in India who depend on farming for their livelihoods. Accordingly, these issues top the list of concerns voiced by Indian citizens at the eve of this year’s elections (see inset ).

Business as Usual – The Battle-lines of the Current Election Campaigns

While India’s electorate is increasingly focused on the implications of India’s economic transformation, the majority of politicians (from all sides of the political spectrum) appear to have only partially recognised this and have continued to fight the current election in large part along ‘traditional’ Indian lines: appealing to religious, regional and caste identity, impugning the capabilities of their opponents, and focusing on other election issues that resonate with voters. While economics does of course play a role in both parties’ narratives, the current election is being fought on a surprising narrow set of issues, with little meaningful debate on who can best deliver on India’s promise, and neither party has formulated, or at least given expression to, a long-term vision of India’s potential place in the world beyond a vague notion of India ‘rising’. The key arguments that the two national parties – the BJP led by Mr. Modi, and the Congress led by Rahul Gandhi - is making to court votes are as follows:

  • The BJP – A Referendum on Modi: The BJP’s and its supporters’ have looked to position what is a parliamentary election fought by parties as a US-style presidential election fought by one candidate. Riding on the back of Mr. Modi’s continued high levels of personal popularity, they argue that he is the only credible leader for India at the national level, based on two main line of argument: economic and security/nationalist. “Your vote in 2014 for a strong and decisive government enabled us to fill some of the biggest shortcomings of five decades of dynastic rule in a short span of just five years. Now that these shortcomings have been successfully addressed, imagine the pace at which we can work in the times to come” In terms of economic arguments, Mr Modi in their view has put the economy back on track after years of ineffective rule by Congress, successfully tackled the key structural issue of corruption and put in place key reforms that India needs to achieve its potential. In this view the economic challenges encountered by India during the past five years have been due to (unavoidable) implementation challenges of major reforms or to global economic developments outside of India’s control. Given Mr Modi’s track record of the past five years, they argue, he deserves more time to implement further reforms and fulfil the promise of ringing in ‘Acche Din’ (good times) for India, in parallel to building out India’s position in the world. Mr Modi’s opponent Rahul Gandhi is mocked as ineffective, the incapable scion of a political dynasty that has run its course, with Mr Modi himself not above taking personal pot-shots at Mr Gandhi.
    Beyond the economy, the BJP’s second angle of attack, focused on security and patriotism, seeks to tap into more sectarian and nationalist (particularly Hindu nationalist) voter sentiments, and during the past five years the government has courted these voters with initiatives like beef bans, closing slaughterhouses and being slow to condemn violence against Muslims While these actions are clearly divisive, they resonate with the BJP’s conservative base. In this narrative, Modi is the protector of traditional Hindu values, which is under attack from both domestic and international threats, particularly from Pakistan, India’s Muslim neighbour. Following the escalation of tensions with Pakistan this past February leading to mutual airstrikes, the BJP’s supporters have argued that only Mr. Modi has the will to take on repeated provocations by Pakistan and terror organisations supported by it. The security arguments seem to resonate with a large percentage of the population and so take support beyond the BJP’s conservative base.
  • The Congress – A Fight for the ‘Soul’ of India:The Congress is also looking to make this election a referendum on Mr. Modi himself, rather than as a choice of preference between him and the younger Mr. Gandhi, whom even many dedicated Congress supporters struggle to see as the person decisively leading India through the next phase of its journey. Overall, Congress’s campaign seeks to disqualify Mr Modi from office more on his political track record than his economic one. Congress supporters have sought to pitch this as a battle for India’s identity, highlighting the perceived setbacks to India’s democratic, pluralistic, secular and liberal values under Mr. Modi. They point to the increase in incidents of communal violence, particularly against India’s large Muslim community by BJP supporters, Mr Modi’s failure to promptly condemn many of these incidents and more broadly to other attempts by elements within the BJP to polarise the electorate along religious lines. “Over the last 5 years of the BJP government, India has suffered under the ‘Modi model,’ which has devastated our economy, impoverished our farmers, destroyed jobs, divided communities, stoked hatred and spread fear. It is a model that has stripped the average Indian of dignity, voice and trust. This is not the model India deserves.”
    In terms of the economy, supporters of Congress point to the (low) rate of job creation, India’s slowing economy and the adverse impacts of some of the government’s signature reforms like demonetisation as evidence that Mr Modi’s economic track record is not what it is made up to be (while failing to present a cogent plan of their own to address these issues). In this narrative, Mr Modi is attacked as a ‘strong-man’ who is dividing India with his politics while at the same time failing to deliver at the fundamental level on his promise of economic growth that got him elected in 2014.

Stepping back, among the two, the BJP, perhaps naturally as the incumbent, clearly seems to be more attuned to the economic task at hand for India’s next government and have therefore made issues like continuing reforms and increasing investment a more visible part of their election platform. However, with voting for the general election already underway, tactics rather than vision and policy may well dictate the approach to its election strategy, and it will be up to the winner to pivot their attention to the challenge at hand post the election. At this stage in the game, winning at any cost is the only viable strategy and the BJP appears to have the upper hand.

The US$5tn Manifesto: What Great Looks Like.

Both parties issued their respective election manifestos in only the final stages of the election. In the BJP’s manifesto, released in April, security and nationalism top the party’s list of priorities. Under the heading “Nation First” it stresses issues like national security, border security, terrorism, and annulling the autonomous status to the Muslim majority state of Jammu and Kashmir, (as well as supporting the construction of a highly contentious Hindu temple). The party’s commitment to creating a US$5tn economy by 2025 only show ups somewhat further down the list. The Congress Manifesto on the other hand leads with employment and growth - particularly jobs, industry and infrastructure -a deemphasizing security in its list of priorities. However, while the creation of 3.4m new jobs is second among the core 15 pledges of the party, the others focus on a much wider range of topics like climate change, gender justice, hate crimes, and minority rights, with few economic or quantitative deliverables.

Neither manifesto formulates a clear vision of India’s potential or its place in the world a decade from today. And both are light on measurable targets in the key areas where India’s government will need to be active to ensure the country’s continued development. An effective manifesto for the winner of this year’s election would have recognised the magnitude of the transformation India is undergoing, sought to further build on the country’s fundamental growth drivers, removed obstacles to growth, and addressed key existing imbalances to ensure the sustainability of India’s growth. Such a manifesto would cover:

  1. Mass Job Creation – Creating 1m Jobs a Month in the Formal Economy. With 12m young Indians entering the workforce every year, creating many more and better-quality employment opportunities is more critical than ever. While economic growth has recovered in the last five years, from c.5-6% to c.7.0-7.5%, net job creation has been c.0.5m per month ; India needs double that amount to keep pace with the additions to the labour force. The new government will need to activate multiple policy and regulatory levers (and fiscal incentives) to accelerate high quality job creation across both manufacturing and services.
  2. Foreign and Domestic Investment – Securing US$500bn to Drive Industrial Growth. New industrial opportunities will need meaningful capital to create capacity and jobs, requiring continuous and increased fixed investment both domestically by India’s corporations and from abroad through FDI. While FDI has increased considerably over the last five years, overall fixed investment still remains around 32% of GDP, well below the c.35-40% of GDP that India needs to sustain GDP growth rates of 8% and above . Securing US$100bn of additional industrial investment annually for the next five years could push investment levels into these
  3. Financial Inclusion – Deepening Financial Participation and Increase Credit to 100% of GDP. While recent government initiatives have brought millions of Indians into the formal financial system, with 80% of adults now owning a bank account, credit growth over the last five years has declined due to asset quality issues at India’s state-run banks and restricted access to attractive financing rates. Increasing the penetration of sophisticated financial savings and insurance products (still low relative to global benchmarks) will be critical to increasing the growing credit from currently 56% to 100% of GDP.
  4. Urban Infrastructure Development – Building A New Mumbai Every 18 Months as an Economic Engine. India’s urban development is simply not keeping pace with the growing population of its cities, and with every passing year the ‘infrastructure deficit’ for India’s city dwellers continues to increase. With the large metros seemingly bursting at the seams, policy-makers will need to redouble their focus on urban infrastructure and habitat build-out, both in existing and in new cities, to provide the quality of life that young Indians moving from rural areas to the cities are starting to expect.
  5. Foreign Policy – Establishing a New Superpower. In India, political preferences during Phase I of its development were largely shaped by survival issues like poverty, drought and famine. India’s transition into Phase II saw India lose the respect of the international community and begin to regain it. Phase III, however, is shaped by the growing confidence of an India taking its place economically, politically and socially in the world. India’s foreign policy and bilateral and multi-lateral engagements with the world will need to position India has a proactive and prominent member of the international community leading on issues important to not only its electorate but also to the world and so it will need to have a stance on issues such as non-proliferation, environmental protection, and regional security

Executing such a manifesto would of course clearly be a challenge even in a country that is not as politically complex as India often is, and it is usually only the authoritarian countries like China that regularly meet the targets in their five year development plans, so the above would be a tall order for either party under any possible election outcome.

However, it is important to remember that India’s core economic growth is being driven by macro-economic factors largely outside of the control of government policy. While the execution of the above manifesto might be necessary to create an economy that grows at 10%, the bar to India growing at 7-8% is much lower. Ensuring that India gets to a US$5tn economy by 2024 may require India’s next government to do as little as focusing on items 1, 2 and maybe 3 on the list to ensure productive employment growth through the period and otherwise getting out of the way to let markets and the private sector seize the moment. This does not mean of course that the government should not try, or that India’s citizens will not demand that their government do more.


Conclusion: Meeting the Demands of the Changing Electorate

While this election will still be fought on traditional terms, the core issues raised above will need to be front and centre on the agendas of both parties. The underlying drivers of India’s economic development are also the ones creating substantial demographic and social changes that are in turn transforming the Indian electorate. Comparing the current voting population with that of the last election 2014 illustrates the nature and scale of the changes to date, all of which are set to further accelerate in the coming years has India continues to develop.

  1. c.120m Eligible First-Time Voters . With almost 25m Indians turning 18 and becoming eligible to vote every year, there are over 120m potential first-time voters in this election. While political allegiances among India’s elderly voters are more likely to be established, young voters represent a key potential swing vote.
  2. c.75m More Urban Voters. With c.15m Indians moving from the rural areas to cities each year, the total urban population is c.20% larger than it was five years ago. While most politicians continue to play for rural votes, the urban voter base is expanding rapidly and expressing very different development priorities.
  3. c.45m More Middle-Income Voters. As India grows, disposable incomes and wealth continue to rise, and while India still remains overwhelmingly a poor country and politicians will continue to focus on these voters, the number of adults with wealth over US$10,000 has increased from 43m in 2013 to 78m in 2017, or an addition of c.9m per year.
  4. c.23m More Indians in High School or College. India’s enrolment ratios, particularly in secondary and higher education are rapidly rising with the number of students enrolled in high school or colleges and universities increasing by c.4.6m per annum (between 2013 and 2016) , implying c.20-25m more individuals with a high-school and college education vs. five years ago.
  5. c.384m More Digitally-Connected Voters. The rapid expansion of mobile data networks and proliferation of low-cost smartphones has driven a rapid increase in internet penetration, with the number of internet users increasing from 243m in 2014 to 627m in 2019 . Accordingly, voters are better informed and less dependent on mainstream media channels for their information (but also more susceptible to ‘fake news’).
  6. c.355m More Financially-Integrated Voters. The last five years have seen a sharp increase in financial inclusion through a combination of (i) c.355m new bank accounts opened with c.US$14bn of deposits in the last five years through the government’s flagship financial inclusion scheme, and (ii) the increased accessibility of various financial products due to the rapid expansion of financial technology platforms.

Extrapolating these developments into the future provides a clear path of development for India’s electorate: it is becoming larger, younger, more urban, richer, more educated, more connected and financially-literate, and at an accelerating rate. While all of these groups may still be a minority in absolute population terms, their numbers are growing rapidly, as the number of people more typically associated with India’s earlier development phases - poor, rural, less educated voters - historically courted aggressively by politicians is declining every year. Moreover, while the constituents of India’s emerging electorate listed above may overlap to a great extent, a fraction of each one alone represents a potentially game changing bloc of voters. For example, assuming the same level of voter turnout as in the previous election (66%) would imply a total of 590m votes cast in in this election. Securing only half of the country’s first-time potential voters would win 10% of the total seats in parliament.

Unsurprisingly, the priorities of India’s changing electorate are closely (but of course not exclusively) tied to the macro-economic drivers that they are subject to: urban voters care about infrastructure and urban development, young voters care about education and job creation and middle-class voters care about participation in the consumer economy. First and foremost, the new generation of Indian voter is driven foremost by the aspiration to participate in India’s growth; and not by the ethnic, caste or religious identities that shaped their parents. These voters, for the most part, have cast off historical family allegiances to a particular party and are will give their vote to the party that they feel can best deliver for them. Voters’ priorities are increasingly converging with the agenda that is required to deliver growth, aligning the future electoral and economic priorities for India’s political parties to focus on in future elections.

However, it is of course important to continue to recognise the challenges that India’s transition will bring to the least mobile portions of its citizens: the old, the illiterate, the poor and the remote. While demographics may be shifting away from them, they still represent a mass of hundreds of millions of people who India’s leaders will need to include in whatever vision of the future they seek to bring about. Alongside ‘letting go’, creating the conditions for rapid growth and opening to the world, India’s leaders will also need ensure that the wealth created can provide basic education, healthcare, social security and infrastructure for all of India, not just the parts that are driving the growth.

The challenge of leadership would suggest that a Modi or equally overt leader is better suited to execute the growth agenda. That appears to be the order of the day in the world where tough leaders, democratically elected or otherwise, are favoured to handle seemingly tough situations that electorates perceive face them. Post victory though, such leaders would do well to change gears and heal any divides that exist (in some cases fostered by them) and become more balanced and inclusive than they might have been in their campaigns. The US under Trump and a UK under Brexit illustrates how a perpetual war on the opposition fractures a country and undermines its progress. An India that ends up deadlocked in division and strife or in a war with Pakistan will surely be knocked off the growth trajectory that it deserves and its people demand.

India’s peaceful democracy, currently in action, is one of its greatest strengths, as is its open society. While Mr. Modi is widely recognised as the strong economic candidate, elements of his party and his base threaten the open society with sectarian division that risks undermining India’s long-term growth potential. While it is unrealistic to imagine that Mr. Modi will stop playing to his Hindutva base or stop promoting their interests, culture and rights, his call to all Indians in his winning speeches shows the recognition of the importance of a pluralistic India, where being Indian was enough. To strengthen that will need him to confidently clamp down on persecution, violence and prejudice especially within his own ranks.

Inclusion of course requires more than just equity and financial redistribution. In a country with every major religion, 22 languages, 645 tribal communities and thousands of castes, inclusion also means pluralism, diversity and liberalism. If Mr. Modi were to be India’s prime minister, he would need to take his respectable track record of economic reforms and recognise it was not enough. He would have the chance to recast his party and himself as a unifier, forgive and seek forgiveness and continue in the spirit of satyagraha, Gandhi’s idea of non-violence, and use his ‘hard man’ reputation to secure a peace with Pakistan and a position at the top table of global politics. By doing so, he can recast himself as a leader for all Indians and a world leader, with a mandate for change that spans the nation, transforms the country and makes a difference to the world. But before that, the electorate is yet to speak and India has learned before not to underestimate the wrath of the people.


1.    Based on average of all publicly-available opinion polls since January 2019

2.    For example, many polls in 2014 failed to predict that the BJP would win a majority of seats in parliament

3.    See the February 2019 Sign of the Times: India’s Journey to a US$5tn Economy: Growth Beyond Policy

4.    See the April 2019 Sign of the Times: India’s Growth: Critical Turning Points and Geostrategic Implications

5.    See the July 2017 Sign of the Times: Path to Power: India’s Great Opportunity in the Changing World Order

6.    Source: Pew Research Center, Global Attitudes Survey among Indian adults from 23-May to 23-July 2018

7.    Referring to him as a dyslexic ’40-50 year old child’

8.    Indian general elections, given the size of the electorate, are conducted in seven phases over the course of six weeks

9.    Source: India Employee Provident Fund Organisation payroll data (Jan-2019)

10.    See the March 2014 Sign of the Times: 12% Growth Agenda: A Blueprint for India’s New Government

11.    Source: India Population Pyramid

12.    Based on World Bank data on % urban population between 2014 and 2017

13.    Secondary is defined as classes 9-12, higher education includes any level of college or university education

14.    Source: Ministry of Human Resource Development, Government of India

15.    Source: Internet and Mobile Association of India, Kantar IMRB Market Research report (Mar-2019) 

16.    Source: Ministry of Finance, Government of India

17.    Covered in detail in this month’s Leader

18.    Equivalent to c.US$1.5bn

19.    See appendix for definitions and sources