Dec. 24 (Bloomberg) -- For India’s main opposition party, the mood in the world’s second-most populous country is similar to that in 1979 Britain, when Margaret Thatcher came to power on a message of strong leadership and effective governance.
“Mrs. Thatcher won on the slogan of ‘Labour can’t govern - - elect a government that rules,” Arun Jaitley, a leading member of the Bharatiya Janata Party, said yesterday in an interview with Bloomberg TV India in his New Delhi home. “That’s the sentiment that exists in India. The whole country is disillusioned.”
The BJP is touting its management of state governments it leads to end Prime Minister Manmohan Singh’s 10-year rule in elections due by May and return Asia’s third-biggest economy to annual growth rates of nine percent. Opinion polls show it winning the most seats among 543 up for grabs while falling short of a majority.
Singh has struggled to revive an economy with 1.2 billion people that includes a third of the world’s poor, allowing the BJP to gain momentum as consumer-price inflation surges past 11 percent. The Hindu-dominated party’s ability to take power hinges on winning over allies wary of its image among Muslims and other minorities.
Jaitley, who leads the party in India’s upper house, pointed to above-average economic growth rates in the BJP-controlled states of Gujarat, Chhattisgarh, Goa and Madhya Pradesh as evidence it can bolster India’s economy. The state economies grew at an average of 9.5 percent in the year ended March 2012, compared with 6.2 percent nationwide, according to the latest available data from India’s Planning Commission.
“We can’t look at the success of one state and say that’s how you develop,” Sanjay Jha, a spokesman for Singh’s ruling Congress party, said by phone. “It’s not that simple.”
Singh’s administration has poured $77 billion into rural areas since taking power in 2004, according to the Ministry of Rural Development. That helped it achieve annual economic growth of more than 9 percent four times over the past decade, according to data compiled by Bloomberg.
India’s benchmark S&P BSE Sensex extended gains for the third day, increasing 0.1 percent at 10:25 a.m. in Mumbai. The rupee, which has lost 11 percent against the dollar in the past year, strengthened 0.2 percent to 61.845.
India’s economy has expanded at a rate below 5 percent for the past four quarters, while the highest consumer-price inflation since India began tracking the gauge last year has increased the cost of everything from onions to clothing.
Even so, the BJP’s performance running state governments may not translate to success in governing the entire country, said Mohan Guruswamy, chairman of the Centre for Policy Alternatives in New Delhi.
“All of the states are under-performing, spending more than they’re raising in revenue,” said Guruswamy, an adviser to the Finance Ministry under Yashwant Sinha, who ran it from 1998 to 2002 under BJP-led governments. “That growth has been entirely dependent on the central government.”
India’s spending is “bloated” due in large part to subsidies for electricity, petroleum and food for the country’s 833 million rural residents, Sinha said in a Dec. 10 interview. Instead, India’s bureaucracy needs to do a better job reducing food-supply bottlenecks and controlling inflation, he said.
In 1979, Thatcher ran on a platform decrying overspending, a plummeting currency and unprecedented inflation in the U.K. that “has come near to destroying our political and social stability,” she wrote in the Conservative General Election Manifesto in April 1979. “The reduction of waste, bureaucracy and over-government will also yield substantial savings.”
Thatcher’s Conservative party won 44 percent of the vote that year and a majority in the House of Commons.
The BJP, which won the most seats in four of five state polls held since the beginning of last month, will probably need coalition partners to form a government even while winning a plurality in the next election, according to an October survey by the Times Now television channel.
Jaitley said the BJP would be able to provide a stable government in a coalition, adding that the actions of potential partners will be “extremely unpredictable.” A hung parliament could put pressure on India’s sovereign rating, Terry Chan, a managing director at Standard & Poor’s, said earlier this month.
“We’ll have a government that’s decisive and is willing to take decisions, even unpopular decisions,” Jaitley said, adding that Singh’s populist measures won’t translate into enough votes. “You’ll need to go back to 9 percent growth rates to bring prosperity to everybody.”
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