I’ve been turning down all media requests for a post election analysis but talk of whether alliances will hold post elections reminded me of something I wrote 26 years ago - before a Lok Sabha Election result. The basic premise: one who holds 30 seats may have the same power, or even more, as compared to someone who holds 245 seats. A mathematical Power Index explains how Quote Let’s get on with the “Power Indices” of the various political parties. Think of it this way : suppose you require a 50% plus majority to form a government and there are 3 parties in the parliament with the following seat tally : 44%, 39% and 17%. Now, any two of these can join together to form the government and therefore all three of them have exactly equal power, no matter that Party 3 has got less than half the number of seats that the first two have. This is a concept that is of use in any ‘majority wins’ decision rule from shareholder resolutions to jury decisions. Suppose there are 4 parties in the fray this time around: A, B, C and D parties, having 35%, 34%, 17% and 14% of the seats resp. Again if a simple majority is needed to form a government, any two out of A, B & C can form a government whereas the Party D’s support is never really crucial to anyone. If this party’s 14% is added onto the percentages of any of the first three parties, the sum does not exceed 50% and any larger coalition of parties doesn’t require its support anyway. Party D is therefore called a ‘dummy’ - an apt term for someone whose vote can never change a losing coalition into a winning one or vice versa. The dummy has no power, while all the other three parties i.e. A, B and C have equal power. This is inspite of the fact that Party C has far fewer seats than A and B and only a few more than the smallest one i.e. Party D For those interested, there is a technical concept called the Banzhaf Power Index (BPI) of a group, party or person which is defined as the number of ways in which that group, party or person can change a losing coalition into a winning one or vice versa. In the preceding example, the BPI of parties A, B and C are equal and that of Party D is zero. In fact as an individual MP, you are better-off being a part of Party C than Party A or B because as part of the government you get a disproportionate share of the goodies. This is exactly what happened in U.P. where virtually every MLA of a marginal party who joined the BJP government was made a minister - something that was a remote dream for most BJP MLAs. Unquote (First Global's weekly 'Markets, Majorities and Maths', January 1998) Thus if a few smaller partners can hold whichever coalition government to ransom, it introduces uncertainty. “The more things change, the more they stay the same” Hence, I can repeat a 1998 piece which has contemporary parallels We may be in for some interesting times. History also shows coalition governments have been pretty good for the economy and markets.
Ankita Awasthi
9mo
Wow. Love your posts maam
Madhu Iyer
9mo
Nice share
Your prediction & forecasting with Logical Manner proven absolutely Right. Its God Gifted Skills
Arjun Bhaskaran
9mo
The last line is the key. "Power Corrupts, Absolute Power Corrupts Absolutely - Lord Acton". Governments with huge majority underperform economically (1971, 1984, 2009, 2019) as they are hamstrung by internal pressures. Coalition pressures ensure transparent, aggressive capital formation/ Capex (Public & Private) resulting in higher GDP growth. Wider decision-making will reduce sweetheart deals and reduce longterm friction (media outcry, vigilance, courts). Outside support from CPI, CPM rectified Enron style mega project scams in 1991 government. Coalition government is a safeguard against oligopolies that slow economic growth. 'Saving Capitalism from Capitalists. The most radical budget by PC was in 1997. 1999-2004 was an excellent coalition until they shot themselves in the foot with 'India Shining'. In sum, 2024 NDA government will deliver great all-round performance.
Nirbhay J.
9mo
Very well explained. Insightful. The asymmetrical power of an individual MP is a serious flaw in the current electoral system. Proportional Representation can yield better results. However, the end is the performance of government. The best period for India's development, politics, and economy was 1991 to 2011, and that is the era of Coalition Governments.
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9moInsightful as ever. Thank you for sharing this doc. BPI explained well, in a easy relatable manner.