Modi: from Tea Shop to India’s Top Spot

May 31st, 2014
in econ_news, syndication

by Peter Drysdale, East Asia Forum

Two weeks ago, Narendra Modi scored a remarkable, historic victory over the Congress party dynasty that has dominated the Indian political scene for decades to become his country’s next prime minister. His rise from lower caste origins, the son of a tea-stall vendor, to the top job is the stuff of Indian soap opera. His success in winning such a huge mandate from a wide cross section of the Indian electorate, whatever baggage he carries from the Hindu nationalist right, is a heart-warming story of the triumph of a social underdog over the political establishment.

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The stock market surged as the scale of the pro-business BJP government’s victory became clear. Big business has been solidly behind Modi who has portrayed himself as the can-do chief minister of the state of Gujarat, in office for the past 12 years and with three victorious state elections under his belt. In Gujarat, he says, the roads are paved, electricity never stops, and entrepreneurs get access, permissions and support. His supporters call it a ‘Gujarat model’ of economic progress. Modi aims to make it national. Yet among India’s states, Gujarat ranks around the midway point on most indicators of human development, such as primary school education, female literacy and child nutrition.

The former national government, led by the Congress party, was inept at pointing out the holes in Modi’s story. The Congress election campaign has been, most observers would agree, an unled shambles. Though Rahul Gandhi, grandson of Indira Gandhi, would have almost certainly become prime minister if Congress had led the next government, the party did not project him as its leader. Unlike Modi, Gandhi campaigned half-heartedly and with little strategic purpose. Modi, on the other hand, hungered palpably for the top job.

With the BJP’s massive majority Modi will have little problem with internal challenges. His decisive majority delivers real command. He’s bound eventually to disaffect some of his own followers as well as the broad coalition who have joined the bandwagon as he is forced to reconcile the interests of big business — which needs foreign collaborations and investment — and the small traders who have been the BJP’s base supporters — many of whom fear foreign investment in sectors like retail.

The election of Modi to the Indian prime ministership was as remarkable for its mode as its magnitude. There has never been an Indian election that has been more ‘mediated’. In the old days, leaders rode elephants and bullock carts to campaign in rural India. In this election Modi presided over 700 ‘hologram’ meetings in the vast state of Uttar Pradesh alone. A broadcast van arrived in a country town, linked up to the satellite and beamed in a three-dimensional presidential candidate who performed in a studio in his home city of Ahmedabad. People came from far and wide for the show. Twitter became the feature of India’s vast electoral landscape. Facebook reports that Modi has 14.6 million followers and the fastest growing number of anyone in the world. TV gave him a dream run. And the pro-business conventional press was overwhelmingly behind him. Modi has complemented his high-tech campaign with an indefatigable round of rallies and personal appearances around the country.

As the celebrations subside, many Indians might be wondering what they have done. They have voted for change and a new openness in the hope that Modi will lift the country out of low-level growth and political scandal and corruption — a government by the few, for the few not for the vast majority of Indians. They have voted for can-do decisiveness rather than policy timidity.

What they worry about is Modi’s Hindu nationalist origins and his controversial handling of the ethnic violence of 2002 in which 790 Muslims and 254 Hindus died, 2500 people were injured, and 223 more were reported missing. Though a subsequent Indian Supreme Court investigation in 2012 cleared him of complicity in the violence, he is associated with a Hindu nationalist agenda that is nationally divisive.

Modi’s huge mandate and the BJP’s absolute majority are both a blessing and a burden. He will come under pressure from the Rashtriya Swayamsevak Sangh (RSS) and other hardliners to implement the RSS manifesto which calls for the establishment of a Hindu Rashtra (a Hindu polity) with effectively a uniform civil code, as well as the construction of the Ram Temple at Ayodhya, and abrogation of Article 370 of the Constitution, which gives special status to Jammu and Kashmir. Hardliners, such as M G Vaidya, a top RSS leader and ideologue, are already rallying for all these objectives. Hopefully, the end of the coalitional era in Indian politics will not overturn the notion of India as a tolerant society. To reassure the voters whom he has garnered well beyond that base, Modi will have to demonstrate unequivocally that he is leading for all of India.

There is also the question of whether the specific economic and political conditions of growth in Modi’s Gujarat will be easily replicated nationally. Privileging business Gujarat-style won’t be so easy from the centre. The regulatory environment is more deeply entrenched in Delhi than at the sub-national level. And many of the privileges that Modi’s government could dole out to businesses in his home state, like cheap land, are state responsibilities under the Constitution. This means that states, not the central government, will be responsible for many decisions that directly affect business.

But the big strategic choices are with Delhi. The imperative for the new government will be to restore growth momentum without which the nation faces an enormous employment problem as millions of young Indians flood into the workforce — 12 million a year over the coming decade. The need to reinvigorate economic reform, and connect the national development agenda to opening up the economy to business globally, especially its manufacturing sector where the jobs will have to be created, should be plainer and plainer for all to see. This is a task for an internationalist not a nationalist or inward-looking leader. Many believe that Modi somehow has it in him. Hopefully there is the chance for a symbolic turnaround in his posture towards, and standing in, the world as the United States reconsiders his visa status, in doubt around his controversial past.

On the other side of politics, as Robin Jeffrey notes in this week’s lead, reveals a

positive effect of the poor showing [of Congress] might be the withdrawal of Sonia Gandhi, the Italian-born Congress party president and widow of Rajiv Gandhi, and her son and daughter from Indian politics. The “family dynasty” has long stood in the way of a vigorous organisation founded on ideology, predictable processes and able leaders. Their voluntary exit, however, might be too much to expect, since sycophants who depend on their patronage will strive to keep “the family” at the helm’.

As the aphorism about the style of the outgoing Congress government goes, ‘you can’t run a system where incomes are expected to grow rapidly and tomato and onion prices remain fixed’. A Modi government is unlikely to make that mistake.

NOTE: This essay has benefited greatly from the advice and input of Professor Robin Jeffrey.

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