Oil shock alone won’t create a survival crisis for Modi government

Political observers have drawn parallels with oil shocks in the past, which triggered political change and hinted that the current oil crisis may have a similar potential. However, not every energy crisis is sufficient to precipitate a change in government.

The 1973 oil shock created conditions leading to the Emergency and to the 1977 general elections that brought down Indira Gandhi's government. But J P's Navnirman movement — which channelled youth unrest spreading across crucial states — and the draconian experience of Emergency itself played the determining role in her ouster.

Nor was the oil shock of 1979-1980 the only factor that caused the Janata Party to fall. Lack of internal cohesion, clashing ambitions, and ideological contradictions between its constituents — especially between the Socialists and the Jan Sangh — paved the way for Indira Gandhi's return.

The oil shock of 1990-1991 caused by the Gulf War, indeed compounded the balance of payments crisis, causing the subsequent government to undertake economic liberalisation. But the path to P V Narasimha Rao’s minority government was propelled by three other issues — V P Singh’s implementation of OBC reservations, the Ram mandir agitation, and the assassination of Rajiv Gandhi during the general elections.

Did the Manmohan Singh government fall due to prices ranging between $100 to $140 per barrel in 2012-2014? Here, too, the determining factors were political, as the leadership faced allegations of corruption in the allocation of 2G telecom spectrum and coal blocks, and the public perception of policy stagnation.

Therefore, oil crises in the past have acted more as stimuli than determinants of political change. Government change requires political triggers for converting economic grievances into focused political mobilisation.

In the current oil crisis, the economic pressure on the Narendra Modi government is severe. At the national level, India's import bill — of which 22% comprises oil — is under severe pressure. Growth projections have already been revised downwards from 7.7% to 6.7% and are expected to hit the 6% to 6.3% range. Further fuel price rises are in the offing as so far the State-owned oil companies have been buying high and selling low. Energy costs in transportation, logistics, fertilisers, and food production will reduce household purchasing power and push more people into poverty. As the weakening rupee increases the cost of every imported barrel, oil company losses will rise, creating increased fiscal pressure, eroding investor sentiment further, and the rupee will continue to slide.

There is no easy exit from this vicious cycle. While the intensifying economic crisis can reshape the electoral field running up to 2029, one needs to ask whether there are immediate political triggers for change. It’s a mixed bag.

The fuel price hike has given the Opposition a concrete issue to campaign on. However, Modi is better insulated than Indira Gandhi was in 1973 or the V P Singh and Chandra Shekhar governments in 1990-1991 — he runs a fairly stable government despite lacking an absolute majority, and the general elections are still far away.

Moreover, economic pain alone does not topple governments if they retain institutional legitimacy. Looking at political change in India and its neighbourhood, it is clear that only those governments fell under public pressure that had gutted their institutions. This was true of India during Emergency and more recently Pakistan, Sri Lanka, Bangladesh, and Nepal.

Although institutions have been somewhat hollowed out in India over the last 12 years, only the watchdog institutions have been affected — the Election Commission, the Enforcement Directorate, the Central Bureau of Investigation, and the judiciary. The Modi government retains parliamentary legitimacy, and the ruling party is not seen as a vehicle of personal aggrandisement as it was during Emergency, or in Bangladesh under Sheikh Hasina and in Sri Lanka under the Rajapaksas. The ruling Bharatiya Janata Party has genuine organisational depth — in terms of the cadre of its parent organisation, the Rashtriya Swayamsevak Sangh. It is this organisational strength that has enabled the Modi government's consolidation of power, not the personalised loyalty of those manning State institutions.

The Indian State’s capacity for repression cannot be underestimated. Incipient protests and demonstrations are neutralised before they attain any critical mass, lending the government considerable resilience.

Does the frustration of youth with unemployment, exam paper leaks, and rampant corruption have the potential to become the core force of current protests against the government? The common thread in such movements, especially in India’s neighbourhood, has been the digital organisation of a decentralised youth movement whose distributed leadership was difficult to decapitate. All that India has produced so far is a social media phenomenon — the Cockroach Janata Party — led by a youngster sitting in the United States. It was easy to neutralise.

Elite defection, the usual trigger for regime change, is absent in India. Business elite is bound to the State, bureaucracy survives by compliance, judiciary pliant, and media independence gutted by corporate ownership. The educated urban middle class remains aligned with Hindutva. That leaves the security forces. In Bangladesh, Sri Lanka, and Nepal, when the army refused to fire on protesters, their grievances quickly turned into a demand for government change. In India, the prospect of soldiers refusing orders is remote given the increasing display of polarisation of the leadership of the security forces.

Most importantly Indians have tended to expect change through the ballot box rather than take to the streets. Free and fair elections are the exit valve that most Indian governments have kept open to prevent street protest from snowballing dangerously.

By pushing a Special Intensive Revision of rolls after its 2024 near‑miss, the Modi government risks trouble. If voters see exclusion as manipulation, elections will look stolen. The oil shock, the consequent fiscal pressure, slowing growth, youth unemployment, the declining rupee, and the memory of a near-miss in 2024, are all building pressure on the government.

However, two things would need to happen for political change: enough Indians would have to find the current system intolerable, and to believe that collective action was necessary for change. The first condition has so far been held at bay by the government’s so-called welfare doles, but they may not survive the oil crisis. The second remains stubbornly absent — and the central project of the government is to ensure it remains so.

Bharat Bhushan is a New Delhi-based journalist.

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH)