Indian State Elections & Business Reforms for Q2, Q3 2018

By Kartikeya Singh —

A crowded early morning bus leaves for Wanaparthy district from a Hyderabad bus station as residents of the Indian state of Telangana go to vote on December 07, 2018. The CSIS Wadhwani Chair reviewed the business reforms and new policy measures state governments enacted in the second and third quarter of 2018. Source: Wikimedia user Sree Harsha, used under a creative commons license.

A final batch of five states held assembly elections in late 2018 before India’s general elections scheduled this year. Usually, in the lead up to elections, state governments are busy showcasing the work of their governments over the previous term in an effort to woo voters. In this final round of state elections, the Bharatiya Janata Party (BJP) controlled state governments such as Rajasthan, Madhya Pradesh, and Chhattisgarh in particular had to fend off anti-incumbency sentiments amongst the electorate.  Unfortunately for the BJP, they lost all three states to the opposition Indian National Congress (INC). The Wadhwani Chair in U.S.–India Policy Studies at CSIS reviewed the kinds of business reforms, new policy measures and initiatives launched by these five states over the second and third quarter of 2018 to provide insight into what types of sectors these states focused on in the lead up to their elections.

For the purposes of this analysis the Wadhwani Chair used our weekly updates on key reforms and policies important for the economic growth of India’s states. Our analysis reveals that over the period of the second and third quarter of 2018 states largely focused on policies affecting power, infrastructure, information technology and innovation, and land. To a lesser extent there was some focus on labor policies in states like Kerala and Madhya Pradesh. The most important thing to note is that in 2018, the final year before the general elections, all states ranging from Jammu and Kashmir to Tamil Nadu and Rajasthan to Mizoram were busy launching new initiatives, policies or reforms.

Poll Bound States and Reforms

A deeper look at the poll bound states of Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana, and Mizoram reveals that collectively over the second and third quarters of 2018 they enacted nearly 90 reforms, new policies or initiatives.  The number of measures in Rajasthan and Madhya Pradesh were 19 and 18 respectively while Chhattisgarh, another important state for the Bharatiya Janata Party (BJP), enacted 14. While the small state of Mizoram, formerly the last bastion of INC control in the northeast enacted five key reforms, it was the state of Telangana that leads the pack with a total of 32 new measures.

Overall the power and other infrastructure sectors made up a majority of these measures. Efforts to improve governance, spur innovation and entrepreneurship, and support the agriculture sector were some of the other areas of focus. It is important to note that farmer distress in addition to anti-incumbency sentiments were important factors that affected the outcome of these elections. A breakdown of the sectoral focus by state is highlighted below.


The Vasundhara Raje -led BJP government focused extensively on the power sector with a total of 9 measures between April and October 2018. This included free domestic power connections under the central government’s Deendayal Upadhyaya Gram Jyoti Scheme impacting 760,000 families in the state. Furthermore, the government announced the collection of power bills online for those bills over $292 (agricultural connections were exempt from this). Digital payments should help the Rajasthan state electricity distribution companies improve their performance under the central government’s UDAY reform program.

Madhya Pradesh

The Shivraj Singh Chauhan -led BJP government in Madhya Pradesh focused heavily on infrastructure projects between April and October of 2018. Improving connectivity through expanded infrastructure is critical in a largely rural state like Madhya Pradesh.  A combined total of $350 million in foreign loans will improve over 6,000 miles of roads and benefit over 2 million rural residents. Of the five states, Madhya Pradesh was also the only state to enact land and labor – related policies during this period.  Specifically, the government approved a policy allowing the renewal of lease of land, including commercial plots currently being used for commercial purposes. The move is expected to benefit 500,000 people in the state. In addition, the government opened an employment bureau for senior citizens – supposedly a first-of-its-kind initiative among states in India.


Resource-rich Chhattisgarh focused over a third of its efforts on the power and minerals sector. These initiatives focused largely on initiating new power generation projects and bringing new power transmission capacity online to be able to sell electricity to neighboring states. Despite high turnout at the polls in Chhattisgarh and election polls indicating that farmers felt betrayed by the Raman Singh – led BJP government, the administration only enacted one measure that might directly benefit farmers crop inputs. Specifically, the assembly passed a supplementary budget of $332.5 million in order to pay farmers a bonus amount per quintal as part of the government’s plans to purchase paddy at minimum support price from farmers across the state. In the end, this last-ditch effort to curry favor with the rural electorate was not enough for the BJP to get a fourth term to govern.


The state of Mizoram still has its share of ethnic tensions and governance issues, so it is no surprise that governance-related reforms made up the bulk of the five reforms and policies enacted by the government in the second and third quarter of 2018. Resolving conflicts such as those affecting the Bru and Hmar communities will be the key to setting the stage for the growth of the Mizoram economy – something that the new Mizo National Front-led government can have a role in shaping.


Dissolving the state assembly in September in an effort to delink state and central elections with the political winds at their backs, the K.C.R – led Telangana Rashtra Samithi (TRS) party kept a balanced sectoral approach on new measures across the state.  Health and education related initiatives led the pack while agriculture and innovation related measures continued to balance the needs of farmers as well as Telangana’s urban-led innovation economy. The Wadhwani Chair team have been tracking Telangana policies for some time and it is no surprise that not only the efforts of the government in the lead up to the 2018 assembly elections but even the efforts in the years prior has paid off with a second term of governing the state.


The results of the elections in these five states serves as an important bellwether for the two main parties in India. The INC needed to demonstrate its relevance in the lead up to the general elections in 2019 by winning a few state elections – which it did. Conversely, with a major loss in this round, the BJP leadership must determine what kind of narrative they want to use in the lead up to the general elections. Beyond political bombastics, our analysis reveals how the state governments utilized their final two quarters before their electorates headed to the polls. The impacts of these measures whether real or perceived, will ultimately seal the fate of how India’s two main parties are positioned ahead of a much larger match later this year.

Dr. Kartikeya Singh is deputy director and senior fellow of the Wadhwani Chair in U.S.-India Policy Studies at CSIS. Follow him on twitter @KartikeyaSingh.

Kartikeya Singh

Kartikeya Singh

Dr. Kartikeya Singh is deputy director and senior fellow of the Wadhwani Chair in U.S.-India Policy Studies at CSIS.


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