The two Modis


India is stumbling because of its prime minister’s failure to curb his darker side

Modi needs to show more of his reformist character and less of the Hindu
Natioanalist, says Max Rodenbeck

report on
India | The Economist – India :  October
26th 2019

To roars of
approval from the pumped-up crowd packing a stadium in Houston, Texas, India’s
prime minister gave his answer to the local greeting. “You ask, ‘Howdy, Modi?’,
so I say, ‘Everything is fine in India!’” The prime minister repeated the
phrase in half a dozen Indian languages, drawing more roars from different
parts of the crowd. Narendra Modi is a master at turning such shows to his
advantage. For more than 4m Indian-Americans, he had subtly equated his own
person with the Old Country. And, by persuading President Donald Trump to
appear on stage with him, he was showing a resurgent India, respected by world
leaders and walking tall on the world stage.

The son of
a Gujarati grocer and a devout Hindu nationalist, the most powerful prime
minister in a generation projects a comforting small-town conservatism. Yet his
natty dress, uplifting talk of progress and cutting wit speak of upward
mobility. Mr Modi’s stilted English may be awkward, but his aura of confidence
declares the arrival of a bolder, stronger country.

As on the
world stage, so at home. When the results of India’s election were announced in
May, Mr Modi’s Bharatiya Janata Party (bjp) surprised even its own supporters
with the scale of its re-election success. The party had more money, more energy
and a sharper message than its feeble, divided opponents. But mainly the
outcome was a personal triumph for Mr Modi. Pundits now assert that after
decades of wobbly coalition governments, India has entered a phase of hegemonic
politics reminiscent of the 1950s and 1960s, when the Congress party held
unchallenged power. The bjp’s current majority means it could push through
almost any legislation Mr Modi wants. But for all his massive mandate, can he
hold India together in all its contradictions and move it forward?

Judging by
his first term, and his government’s trajectory in the early months of his
second, the answer is not at all clear. A great deal of hype accompanied Mr
Modi’s arrival on the national scene in 2014. He was praised as a can-do,
pro-business pragmatist who would wipe clean and shape up a government widely
seen as venal and rotten. Yet Mr Modi’s first five years proved in many ways a
wasted opportunity. With some notable exceptions, such as the introduction of a
nationwide goods and services tax (gst) and a huge effort to stop “open
defecation” by building more toilets, bold reforms were largely postponed in
favour of policy tinkering, sops to noisy constituencies and packing the
bureaucracy with loyalists. In his latest term, Mr Modi has seemed more intent
on following another side of his character, consolidating personal control,
punishing political foes and pursuing Hindu-nationalist ideological goals such
as placing 7.5m unhappy Muslims in Kashmir under extended lock down and direct
rule from Delhi than dealing with more pressing economic issues.

A reckoning

Mr Modi’s
government has failed to acknowledge looming dangers to India’s economy and is
now struggling to cope with an alarmingly sharp slowdown. In the first half of
2019 new banking credit to businesses crashed by a shocking 88%, and growth
fell from 8% in 2018 to just 5% this year. For a large and diverse economy,
this remains a respectable figure. But demographic pressures mean that India
must sustain growth of 7.5% just to keep unemployment in check and needs to do
even better if it hopes ever to catch up with China. “Anything less than 6%
feels like a recession in India,” says Pranjul Bhandari, chief India economist
at HSBC in Mumbai. And some of the troubling domestic indicators such as this
year’s sudden plunge in car sales, lingering debts in banking, property and
power-distribution companies, and long-term declines in consumer spending,
household saving and industrial investment could soon meet strengthening global
headwinds to create a nasty storm.

current economic challenges are not due to some big outside cause. The country
has the resources and talent to grow strongly for decades to come. This special
report will argue that its troubles stem largely from policy failures, albeit
more by omission than commission. Successive Governments at state as well as
national level have failed to pursue sensible, consistent policies to promote
growth. Mr Modi, too, for all his promise, is failing in this regard, as he
follows more his nationalist, rather than his reformist, instincts.

India is
not easy to govern. What other country has nearly 800 spoken languages, 22 of
them languages of state? And what other society is fragmented into more than
3,000 castes, each with its own proud creation myth? Some caste rigidities have
softened over time, but the structure is remarkably robust: even now only one
in 20 marriages crosses barriers of caste. India’s large Muslim, Christian,
Sikh, Buddhist and Jain minorities often claim to be free of caste. In practice
they are nearly as compartmentalized as the 80% Hindu majority. Economic
divisions coexist with social ones. When introduced in 2017, the gst replaced a
web of local taxes stretched over 29 states and seven territories. Goods move faster
now, but they still cross radically different economies. Residents of Goa on
India’s west coast enjoy incomes per person 12 times those in Bihar, a rural
state to the north-east. Levels of fertility, literacy and life expectancy in
the southern states of Kerala and Tamil Nadu approach those of Thailand or
Turkey; in parts of the Gangetic plain in the north they are nearer to those of
sub-Saharan Africa. Banks in Maharashtra, home to India’s commercial capital,
Mumbai, boast loan-to-deposit ratios of 100%, as in advanced economies. In
India’s most populous state, Uttar Pradesh, they are stuck at 40%, reflecting
slim pickings and high barriers to enterprise.

such disparities are other divisions, between prospering cities and struggling
hinterlands, and between the few big, globally competitive conglomerates with
access to capital, knowledge and political clout, and millions of small firms
at risk of extinction from a flick of the government’s bureaucratic tail.
India’s “formal” economy may indeed have grown by 8% in early 2018, as the
government’s gdp figures insist. But the hard-to-measure “informal” economy,
accounting for three out of four jobs, may have been growing by just 2%, or
even tumbled into recession.

India’s many fractures generate anxieties. This is especially true when the
pace of change accelerates, and when awareness of differences grows. Although
India’s population growth at national level has slowed markedly, the total
tally is still expected to overtake China’s by 2027. India faces both a big
bulge in working-age people and a growing rural exodus. Unemployment figures
are unreliable, but the trend is unmistakable. Fewer young people can find a
job, never mind one that matches their hard-earned qualifications. Openings for
even menial posts attract throngs of overqualified applicants.

current economic challenges

 stem largely from policy failures

As such
competition mounts, an explosion in access to information is demolishing
archetypes and encouraging greater ambition. By next year, 700m Indians will be
online, a 14-fold increase in ten years. All but a small fraction of them use
Smartphones. Between 2014 to 2018, Indians’ consumption of mobile data grew 56
times. The sheer volume of fake news, gossip, political spin and cricket
highlights eclipses anything carried by print, broadcasting or Bollywood. For
tens of millions of Indians, revolutions that took generations to unfold
elsewhere seem to be happening overnight; in literacy, in exposure to the wider
world and in expectations for personal achievement and freedom.

respondents said they had no one to count on in times of trouble.

In spite of
the “Modi effect”, and in contrast to the ebullience of a decade ago, when
India was at the tail of an economic boom, the mood today is anxious and
unsettled. This special report will argue that for the country not only to
prosper but to be strong as a nation, it needs to change course. Without
sweeping administrative reforms, the government itself will remain hamstrung by
inadequate capacity. Without a clearer vision and bolder approach to economic
policy, India will continue to underperform. Without a firmer commitment to its
own constitutional principles, the drift towards authoritarianism will
accelerate. And unless Indians resist Mr Modi’s push towards heavy Hindu
Majoritarianism and instead embrace their diversity, what will soon be the
world’s most populous country may remain a largely unhappy one.

article appeared in the Special report section of the print edition under the
headline “The two Modis”

The Economist – India

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