By Krishna N Das and Shyamantha Asokan
KASBA BONLI, India, Nov 11 (Reuters) - Kasba Bonli is anewly prosperous market town in the northern Indian state ofRajasthan and it should be a perfect advertisement for theruling Congress party's pro-farmer policies. Instead the buzz inthe bazaar is for the opposition.
In just a few years, handouts for farmers by Congress havehelped turn the once-deprived village into a thriving retailcentre, selling everything from glittery bangles to satellitedishes.
The Congress party-led government pours at least $20 billiona year into rural India in addition to free education and healthand cheap food. Cheap fertiliser, seeds and electricity, 100days of guaranteed paid work a year and new rural roads havegiven farmers cash to spend.
These funds have helped create an emerging middle class,mostly in semi-urban and small towns, which one estimate has putat almost a quarter of India's 1.2 billion people.
But many in this new middle class believe the next step upthe income ladder will come when the opposition Bharatiya JanataParty (BJP) and Narendra Modi, its candidate for prime ministerand currently the chief minister of neighbouring Gujarat state,will be in power. That bodes ill for Congress ahead of a generalelection that must be held by May.
Farmer Raghuvir Meena, who voted for Congress in the laststate polls, bought two new tractors over the past few years andnearly doubled his farming area, attributing the prosperity tobetter farming techniques and seeds. He sent three of his fourchildren to college to train as teachers. Now he wants to getout of farming and this time Modi has his vote.
"Modi's track record in Gujarat has excited the youth. EvenI would love to see BJP come back to power, for my kids, fortheir jobs," he said, juggling phone calls on his mobile.
Modi is widely seen as a business-friendly reformer who hasattracted investment and bolstered economic growth in Gujarat,providing jobs to many.
For Congress this trend in the small towns is the latest ina series of reverses. It is already battling slowing economicgrowth, perceptions of poor governance, several corruptionscandals and the growing popularity of Modi.
For decades, Congress relied on its pro-farmer policiesgiving it rural votes. Then, at the last election in 2009, itgained wide support in cities during a period of fast economicgrowth to win a second consecutive term in office.
However, the urban goodwill is fast eroding because ofcorruption and a sense of policy drift, while its baseconstituency of rural poor is shrinking.
"It's a new phenomenon. It's not something that we have beenused to in the past," said Jairam Ramesh, India's ruraldevelopment minister, of the demographic shift.
"Very often experience shows that beneficiaries ofprogrammes instituted by one party end up voting for the otherpolitical party," he said.
Beyond the commercial bustle, Kasba Bonli has little tooffer to the groups of twenty-somethings who loiter onmotorcycles in the dusty market, unable to find work.
Often the first graduates in their families, these young mensay they want industries and professional jobs rather than morehandouts, and they look to Modi for providing suchopportunities, not Congress.
Modi has attracted companies such as Ford Motor Co,Maruti Suzuki and Tata Motors to Gujarat,the state he has governed since 2001.
But he is also seen as a polarising figure. Critics of Modi,a Hindu nationalist, say he didn't do enough to stop religiousriots on his watch in 2002 that killed at least 1,000 people,mainly Muslims, although the allegations have never been proved.Others say that despite fast growth, his state is a laggard onsocial and poverty indicators.
That's not the impression held by Mateem Khan, a frustrated22-year-old Muslim resident of Kasba Bonli with a lowlydata-entry job at the local office for one of the handoutschemes, the only skilled work he could find.
"Look at what he has done for Gujarat, there's hardly anyunemployment in the state," said Khan. Kasba Bonli's 18,000people are about half Muslim and half Hindu.
Four banks, 15 private schools, and one private college have sprouted up in the town since 2008, said Ramkishan Gurjar, headof the village council that governs Kasba Bonli. Motorcycle andtractor showrooms have come up over the past three years.
Many local farmers now clutch mobile phones they use to chatto traders about crop prices. Roads have been built to a dozensurrounding villages, helping bring crops quickly to market andconsumer goods flowing the other way.
It's a pattern repeated across the country, with swollenvillages becoming small towns, creating a demographic group ofrelatively better off semi-urban voters that barely existed adecade ago, social scientists and politicians say.
Rural consumer spending grew by 36 percent, higher than the33 percent rise in urban areas, between 2009 and 2012, accordingto government data.
A national census in 2011 found that 14 percent of India'surban population of about 400 million lived in these towns,double that of a decade earlier. Boston Consulting Group calculates 24 percent of Indian households are now found insmall towns.
Modi has directly addressed this demographic shift, cateringspeeches to the new constituency and promising urban amenitiessuch as around-the-clock electricity and broadband internetconnections to communities similar to Kasba Bonli.
Opinion polls suggest he is making headway. In a recentNielsen survey of two largely rural states, Bihar and UttarPradesh, that contain a quarter of India's population, Modiemerged as the most popular candidate for prime minister.
In Rajasthan, the state in which Kasba Bonli lies, the Congress and the BJP are neck and neck in the villages withsupport from 46 percent of voters each, according to a July pollby the Centre for the Study of Developing Societies (CSDS), athink-tank.
However, in towns of less than 100,000 people, which fallunder the semi-urban category, BJP scored 56 percent toCongress's 40 percent.
India electoral mathematics is complicated, taking in localissues as well as caste and religion, making it hard to forecastresults. But Rajasthan and four other states hold provincialelections over the next month, which will provide a pointer tohow far Modi's popularity extends and how Congress may fare inthe national election.
"If you look at people in the (semi-urban) category, theyhave benefited from education and reservation policies for lowercastes. But increasingly our surveys show that, as people getmore educated and affluent, the possibility of them voting forthe BJP is much higher," said Sanjay Lodha, who co-ordinatesCSDS' polls in Rajasthan.
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