India will be celebrating her democracy through elections 2014. At stake is the right to govern a country of 1.25 billion people. About 815 million people will be eligible to vote, 500 million below the age of 40, around 300 million below the age of 30 with about 125 million voting for the first time! A new generation will be deciding their rulers, focusing on the future with lesser emphasis on caste, religion, region, language or any such emotional issue.

The main issues in this election are high inflation, corruption, jobs, governance and economic growth. India has grown at more than 7.5 per cent per annum over the last ten years, but this period has been racked by huge corruption scandals, bad governance and high prices. As a result, job generation has been inadequate and an aspirational generation has become extremely frustrated.

The last five years have seen very high annual inflation, in double digits. Even though per capita income has grown by around 6.1 per cent a year, high prices for food, items of daily needs, fuel, education, health care and general services meant that families have been hard hit, creating great anger and frustration. This has been fuelled by a very high fiscal deficit, resulting in borrowings of Rs2.323 trillion (Dh145.18 billion) over the last five years, as against Rs878 billion in the five years before that. Most Indians feel worse off today than five years ago. Further growth rates have come down from 9 per cent per annum five years to barely 5 per cent today.

Since the economy has grown at such a high pace over the last 10 years, the scope for rent-seeking has increased tremendously. Corruption scandals like the 2G scam, the coal gate scam, the Commonwealth Games scandal, land acquisition etc have been beyond known limits. A new “approval Raj” (regime) has come into being creating scope for further corruption. Getting approvals for environment clearances, acquiring land for industry, mining leases etc. has become extremely difficult. Crony capitalists seem to have captured economic policy making. There was a sense of a policy paralysis because of an extremely active environment minister who made sure that India became a net importer of coal of around 170 million tonnes a year despite having the third largest reserves in the world. Now we have 5,0000MW of power plants ready for commissioning without fuel leading to energy shortages.

This high corruption has led to an activist judiciary, a super active Comptroller and Auditor General (CAG) and a hyper active CBI further exposing corruption leading to a virtual stoppage of economic decision making and a grid locked Parliament. This has led to a deep sense of revulsion against politics and politicians, giving rise to an anti-corruption movement that enjoyed unprecedented support and morphed into a political party. Corruption has become the major issue for citizens who are demanding a strong response and are seeking a corruption-free government in 2014.

Breaking out of log-jam

Despite high economic growth, there was inadequate job generation in India over the last 10 years. The Economic Survey 2013 says that the years from 2000 to 2010 saw formal job generation of only 1.6 per cent a year leading to great pain. Informal jobs showed good growth, but they were of an inferior quality. Many sectors saw lack of permanent jobs due to adverse labour laws. India needs nearly 18 million new jobs to be created every year to meet the needs of young folks coming into the job markets. Jobs growth has been a failure due to focus on capital-intensive industries, inadequate investment on infrastructure, lack of labour reforms and now reduced growth in the last three years. India’s youth are angry and frustrated and are seeking to vent their anger in elections.

Governance has palpably failed in the last five years due to the above. India also suffered from a disruptive opposition that shut down parliament frequently, not allowing the passage of laws that were to relieve choked reforms. Leadership in the ruling party was too weak to break out of the log-jam with multiple power structures, bad communications and a geriatric leadership. Various departments were at loggerheads, pulling in opposite directions, holding up approvals necessitating the creation of a cabinet committee on infrastructure to clear investment proposals. The focus shifted to giving more doles to make up for lack of jobs, trying to solve old problems than the challenges of the future. For a country with an average age of 27 years where growth and creation of jobs were to be the top priority, suddenly the focus shifted to food security for 65 per cent of the population, leading to confusion on the future strategy and greater anger amongst the youth.

All this led to a slowdown in economic growth to below 5 per cent per annum with high inflation leading to fears of stagflation. As investment proposals were stuck half-way, the banking system was showing deep stress with stressed assets around 10 per cent of total lending with more to come. Banks are focused more on recovery than lending with a massive drop in investment proposals. Consumption has come down; investments are down to 35 per cent of GDP, from 38 per cent five years ago; savings down to 30 per cent, from 35 per cent; with a large current account deficit of 6 per cent of GDP. The deficit has now come down giving some respite, but interest rates have been raised to combat high inflation. For the last three years, tax revenues have been below budget, plan spending has been cut every year to manage the deficit and fuel prices have been raised. It is a perfect storm all across which election 2014 seeks to overcome.

The good news is that the focus of this election has shifted to growth, good governance, jobs, anti-corruption measures and the search for a new generation of leaders to meet the aspirations of a new generation. For 66 years, the old formula of caste, religion, communalism, region, etc were dominant, but this election promises to be a watershed. India has changed dramatically over the last 10 years, aspirations have shifted to a better quality of life and economic well-being, impatience has intensified with the rise of the youth who make up the majority of the electorate, the media has also become more dominant, leading to greater demand for transparency and above all a new generation of leaders are springing up.

There is no certainty that elections 2014 will throw up a stable government, but what is certain is that India and Indians have changed aspirations!

- T.V. Mohandas Pai is chairperson of the Board of Manipal Global Education
Services and adviser to the Manipal Education and Medical Group. He co-founded AARIN Capital.