Inflation remains the only tangible risk, but unless there is an unexpected shock lurking in the international commodity markets, recent data indicates that the economy is out of the woods, as far as inflation is concerned. A weak monsoon due to El Nino conditions could push food prices higher, but it will simultaneously dampen rural demand, thereby generating a natural counterbalance to supply-side inflation.

To cut a long story short, it appears that even a subpar economic performance in 2023-24 – some private forecasters have a GDP growth number lower than the Reserve Bank of India’s 6.5% estimate – is unlikely to lead to an economic crisis. This prognosis might not hold if the monsoon fails completely, but that's a black swan event.

Therefore, there are three questions that are relevant for the 2024 elections.

The first; Will the BJP experience major economic tailwinds?

The answer depends on the relevance of headline GDP numbers for a majority of the voters. Notwithstanding all the debate around poverty and inequality numbers (the controversy itself a consequence of the absence of relevant data) an overwhelming majority of voters continue to draw their living from low-income and precarious informal activities. In other words, their lives are not affected even if GDP growth numbers deviate a couple of percentage points over a couple of years.

Taking this into account, the political part of the economic picture appears much less dynamic. Rural wages have largely been flat in real terms over the past few years, the share of unpaid workers shows a rise despite falling unemployment rate in PLFS numbers, and consumer sentiment continues to be negative, which means that the share of people who think they are worse off than they were a year ago is larger than those who think their condition has improved. There are some warning signs for the BJP here, and things could worsen if the monsoon plays truant.

This leads to the second question.

Will the BJP face large-scale economic anger in the 2024 polls?

The answer is slightly more complicated. The voter, unlike economic analysts, does not look at excel sheet numbers before taking a decision on who to vote for. The economic pain due to a lower growth rate during the second Modi term is unlikely to be a key factor in the 2024 elections. While such decisions are often driven by extra economic consideration (caste and religion are a major factor in India) the economic part of it is more influenced by direct policy outcomes causing pain or relief. Expensive LPG cylinders could be an example of the former while a direct cash transfer programme is a good example of the latter.

It is on this front that the BJP has still not opened its cards. Most basic goods have seen a sharp rise in prices over the last couple of years. Low inflation does not mean a correction in these prices, it only means that prices are rising at a slower rate.

The third question, then, naturally follows:

Will the BJP sacrifice its fiscal consolidation and capex plans to provide relief to the voters from the high prices of key goods (such as an LPG cylinders) in order to pre-empt possible economic anger?

If such a decision has to be made, will it be done before the next election cycle in November-December this year or after these elections? Or will the BJP keep attacking such promises by the opposition parties in the name of criticising freebies? The prime minister has invested significant political capital in this campaign.

It is reasonable to believe that the ultimate resolution of this question will depend on the political pressure the opposition is able to generate on these issues. It is worth reiterating that it took a loss in the 2018 Rajasthan, Madhya Pradesh and Chhattisgarh polls for the BJP to start a direct cash transfer programme in the 2019 interim budget and that too in a retrospective manner.

Every other debate on the economy, notwithstanding its academic or statistical nuance, is unlikely to be a factor to reckon with in the 2024 contest. The most vocal proponents of both extremes of the ideological divide in Indian politics and economics are not going to change their position in 2024. The modal voter who is always struggling to make ends meet is more interested in the immediate impact of the government’s policies and promises on their immediate prospects rather than their macroeconomic propriety.

Every Friday, HT’s data and political economy editor, Roshan Kishore, combines his commitment to data and passion for qualitative analysis in a column for HT Premium, Terms of Trade. With a focus on one big number and one big issue, he will go behind the headlines to ask a question and address political economy issues and social puzzles facing contemporary India.

The views expressed are personal