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Messiah Modi's Unclear Vision

Prime Minister Narendra Modi has promised changes without quite elaborating on how he will go about achieving them

Satyajit Das
Published: Aug 26, 2014 06:07:09 AM IST
Updated: Aug 21, 2014 02:10:36 PM IST
Messiah Modi's Unclear Vision
Image: Getty Images
After his win, Narendra Modi tweeted: “Good times are coming”, but the how is still unclear

Foreign and local investors have been wildly excited by the ascent of Narendra Modi and the BJP to government in India. Expectations are high. But as Friedrich Nietzsche wrote in 1878 in Human, All Too Human, “hope is the worst of all evils, because it prolongs man’s torments”.

Old Problems
India appears to have chosen Modi, rather than the BJP. The government’s political and technocratic talent pool remains unknown and untested.

India’s parliament remains, as ever, the province of dynastic politicians, celebrities, rich and alleged criminals. In this election, 17 percent of assessed candidates faced criminal charges, including for rape or murder.
It will have to deal with internal tensions that surfaced during the poll campaign, dividing the spoils of victory internally and amongst its supporters. It will have to reward its business backers instrumental in BJP’s success.

Despite oft-repeated campaign mantras about the tea-seller’s son, Modi and those in the BJP are professional politicians, proximate to the influential, wealthy and business groups. The BJP spent an estimated $500-700 million on its election campaign, presumably financed by its supporters in expectation of favourable policy decisions.

Business interests that support the BJP are rarely interested in long-term structural reforms. They favour stock market-driven artificial wealth, based on preferential access to government contracts, fast-tracking of approval for their projects, access to national resources like land, commodities and spectrum at favourable prices and access to capital, from state-controlled domestic banks.

On important issues, business interests have significant difference of views that will complicate policy-making. In manufacturing, some believe India has no future and should not seek to compete. Others favour high-value added, advance technology manufacturing. Another group favours labour-intensive low-tech industries, such as clothing, leather and food processing. All groups agree, however, that the government should subsidise their preferred strategy.

See Through
Modi campaigned on an anti-corruption platform, which played well to an electorate tired of scandals.

But his desire for accountability and transparency did not extend to detailing contributions to the BJP’s coffers. It did not follow the example of the Aam Aadmi Party (AAP), which discloses every donation received on its website. The fact that AAP won only four seats does not suggest that the electorate or the major political players are interested in addressing India’s electoral funding system, which is part of the corruption problem.

In early July 2014, Modi appointed close aide Amit Shah as BJP president to strengthen control over the BJP and government. Shah is awaiting trial on charges of extortion and conspiring to carry out extra-judicial killings in Gujarat. He also oversaw the PM’s legal defence when they were charged in the 2002 Hindu-Muslim riots in Gujarat. The actions are arguably inconsistent with Modi’s desire to fight corruption and ensure clean governance and transparency.

Mandates of Heaven
The BJP only won 31 percent of the vote; the Congress 19 percent. The government does not have a majority in the Rajya Sabha. The BJP will have to work with the Upper House to pass major legislations related to the Constitution, tax and foreign investment.

The new government will also have to work with India’s many state governments on matters that are outside its jurisdiction. The states are dominated by regional political parties who received around 50 percent of the national vote. The government will have to deal with a bureaucracy resistant to change and an independent central bank led by a formidable, well-credentialed governor.

Foreign faith in its ability to reinvigorate infrastructure investment misses the point that matters like land acquisition are the responsibility of the states. An analysis by JP Morgan of the 50 largest stalled projects found that 55 percent were being delayed due to state issues and another 25 percent due to problems of access to raw material, controlled by government-owned, but independent entities such as Coal India Limited.

Modi’s Hindu nationalist philosophy and alleged complicity in the Gujarat riots may prove divisive. Open magazine’s cover headline was Triumph of the Will, an unfortunate and hopefully unwitting allusion to Leni Riefenstahl’s cinematic chronicle of the 1934 Nazi Party Congress in Nuremberg.

Only around 10 percent of India’s substantial Muslims voted for the BJP. During the campaign, leaders of one radical Hindu organisation affiliated with the BJP argued that Indian Muslims should not be allowed to buy properties in Hindu areas. Modi disapproved of the statement. However, in Gujarat, there is strong evidence of Muslim marginalisation.

His decision to celebrate his win with a Hindu religious ceremony in Varanasi was a poor signal for a harmonious secular India. These factors will detract from social cohesion, important for economic development. It may also increase tensions with Islamic neighbours.

The decimation of the Congress means India, which had no government, now has no opposition. There may be a few checks and balances on the government, especially given Modi’s presidential style of rule as chief minister of Gujarat.

Looking for Clues
The post-election period has provided few clues as to how the government plans to meet the high expectations of the electorate and markets. In a statement to Parliament in early June 2014, the government announced a series of “national missions” without details of implementation.

The government committed to a “Diamond Quadrilateral project of high-speed trains”, a self-conscious reference to the previous BJP government’s ‘Golden Quadrilateral’ of highways linking major cities. The government would create another 100 new cities with “world-class amenities”. There were commitments to changes in the tax system, including a general sales tax, one of the few precise proposals. India would be transformed into a globally competitive manufacturing hub, powered by “skill, scale and speed”.

The embrace of large-scale infrastructure and manufacturing is interesting given Modi’s previously stated views that India’s requirements are different from China’s and requires a balance between agriculture, small and large businesses.

The statement repeated the government’s “dedication to the poor”. It also committed to better education as well as toilets and broadband and wireless internet access simultaneously. Support for women coincided with reports of yet another heinous case of rape and murder of two lower caste women.

The July 2014 budget highlighted the constraints on the government, with a budget deficit of 3.6 percent for the next financial and 3 percent the subsequent year. Unburdened by detail, the government nevertheless promised to increase economic growth to 7-8 percent within three years, reduce the fiscal deficit, increase employment and improve living standards. There were vague proposals about increasing foreign investment in defence and insurance, reduction of an ineffective subsidy regime, and tax simplification.

The government’s approach appears curious. It reverted to relying on hoary old chestnuts—higher excise duties on cigarettes, cigars, betel leaves, tobacco products and soft drinks—to raise revenue. Prior to the budget, the government was quick to implement export controls to try to rein in the price of onions.

Attempts to increase railway fares by around 14 percent to put the railways in a more secure financial position were seen as a willingness to push forward unpopular but necessary economic reforms. But the resolve crumbled in the face of protests, leading to a repeal of some increases on shorter journeys, which mostly affect urban customers in cities such as Mumbai.

Shortly after his victory, Modi tweeted “Good times are coming”. They might well be, but the ‘how’ still remains frustratingly unclear.

Same Again?
Investors have forgotten that Modi’s less charismatic and less controversial predecessor Manmohan Singh was once hailed as India’s saviour. He was the “architect of modern India” and drove important changes that paved the way for strong economic growth. By the 2014 election, Singh was seen as indecisive, weak and a puppet for interests of the Congress party.

British politician Tony Benn once observed that all political careers ultimately end in failure. It remains to be seen if Modi can bring about the necessary changes or whether he joins an illustrious line of Indian political leaders who did not live up to their promise.

Satyajit Das is a former banker and author of  Extreme Money and Traders Guns & Money

(This story appears in the 05 September, 2014 issue of Forbes India. To visit our Archives, click here.)

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  • Satyamev

    India is a funny place. This country was formed by infusing many independent states with different cultures and religions into a single nation. Our founding fathers knew that the only way to civilise, educate and bring harmony within this new nation is to go secular. With secularism comes equality and tolerance, two important elements of any civilised society. But when and how that vision got so badly distorted and secularism became a tool to divide and rule. The vision was lost and with it the idea of India. 65 years later we still living in confusion along with poverty, discrimination, medieval caste system, patriarchal social order, injustice and rampant corruption. The result when a nation was pushed against the wall with no escape they turned to a man they dont fully understand. India voted for a PM who has a history of massacre and communalism and yes also progress. However, there were many other CMs whose states were doing much better than Gujarat. But the majority probably wanted 1. a Hindu who can cure their Islamophobia and bring balance back to secularism. However, new balance is to be a sense of authority over other communities aka a jungle raj. 2. A businessman who can turn India's cities and town into modern and luxurious spaces. 3. And most importantly, a person who can lead a giant mass of confused, angry and scared people towards a promised land. As they it's always gets worst before the correction. Hopefully, a nation will mature up then.

    on Aug 29, 2014
  • Indian

    Middle Class Indians and Lower Class Indians are not interested in economic growth but interested in their daily food prices to become half. Their Electricity & Water bills to reduce into half. Economy talk is for High Class Indians. BJP has to make Gas Cylinder price into half. BJP has no choice. People has woken up. BJP has to give Achche Din within months and not in Years.

    on Aug 27, 2014
  • Raja

    Society is rotten to the core. Nothing will change.

    on Aug 27, 2014
  • Joy

    Most of the criticism seems to be based on facts, if there is any factual error that should be corrected but doubting authors integity for writng facts shows that everyone knows that till now the performance of the govt has been pathetic....

    on Aug 27, 2014
  • Chandrasekar

    India ranks so low on human development index at 136, if u want to know why India has the worlds largest number of poor after sub saharan africa after 65 years. A nation of 1.2 billion people but can only once in a blue moon win Olympic medals, Nobel prizes. Heck even the billion fans cricket mad country cannot beat New Zealand where barely a few lakhs play cricket. Reason the only thing that works in this country is cronyism. India is expert at crony socailism & crony capitalism. Modi is nothing but a pimp of crony businessmen. If u dont believe me tell me why he has not been able to bring back the black money he promised to bring back in 100 days. India may grow at avg pace bcoz of its people but it will never grow to its potential given the kind of leaders it elects.

    on Aug 27, 2014
  • Mazo

    Another completely asinine attempt to peddle the liberal pseudo-secular agenda and discredit Narendra Modi - apparently some liberals never tire of being wrong! If Satyajit Das is so interested in specifics he should perhaps join the administration instead of whining from the sidelines that there are no \"Specifics\" on implementation! Given the complexities and magnitude of implementation in India, it is impossible for ANY single person outside the government to have a complete understanding of implementing policy. The ridiculous claim that since the specifics haven\'t been made specific there are no specifics or the government can\'t implement its policies is silly. Further, comparing Narendra Modi with that sock puppet - Manmohan Singh is perhaps the most ridiculous thing ever written on Forbes India. Anybody who hasn\'t been living under a rock the last few months in India knows that Narendra Modi is his own man and contrary to the mental challenge Mr Das has in accepting that a son of a tea-vendor can in fact also be a politician, PM Modi truly resonates with the Indian electorate better than any other politician in Indian politics today across the class divide.

    on Aug 27, 2014
  • Anurag Pratap

    EXACTLY. This writeup hits the all major issues with Current Govt, in small to the point liners. Even those who voted for bjp know that its full of mainly communal and corrupt people but they were fed up with so many corrupts of congress and its scams that they had to vote for a substitute just like people were fed up of Vajpayee govt scams. Nothing is going to change with these same rioters and looters running our country Only time will tell how much modi can fool india just like feku\'s gujarat EXCELLENT short article We need more such Writers who call spade a spade. Keep writing Mr Satyajit

    on Aug 26, 2014
  • Amit Kumar

    It is difficult for the thekedaars of the new secularism how regressive their stance is. Let them be since this regression is for the long term. People can and have been fooled by lies, but the consequences of lies are real.

    on Aug 26, 2014
  • Layman

    Why should Mr.Modi make anything transparent to leftists, pseudo-seculars and the elite. Even if he did, it may be beyond your capacity to understand. After all, you have entrenched views and look at India with pink-colored glasses. Also, the comparison with China is a bit grating on the ears. China after all reached its current economic position after murdering more than 35 million of its own citizens. India and Mr.Modi may not be willing to go down THAT path. Mr.Modi has already pulled off a miracle - as a low-caste, educated completely in India, he has won more votes, in free democratic elections, than anyone in recorded history. This is what India expects from her sons.

    on Aug 26, 2014
  • Varun

    Mr Das I wanted to ask you does any Indian Hindus or Kashmir pundits have a rights to buy a land in Kashmir even though Hindus are majority in India but have been cornered in Kashmir. Yes we wanted a change but modi doesn't have a magic wand to change upside down in few months which has been destroyed for 63 years.

    on Aug 26, 2014
  • Rohan

    Did he write a similar article when first time senator Obama got elected to US president with vision of hope and change.

    on Aug 26, 2014
  • Tashan

    The article is not too far from reality. He is indeed slave to few businesses, saffron ideology and self promotion. False hope, lofty claims, mega image.... are and will be the order of the day during his term. Good luck India.

    on Aug 26, 2014
  • Rahul

    Great article! Nothing new but but well encapsulated in a very crisp form. But what is the point in writing such articles? Indians do not deserve democracy for they are the most corrupt and weak minded race on earth. That is why they vote on emotional and irrelevant issues like religion, cast, language etc. This is evident from lok sabha results and it is even more evident in recently declared Bihar Bypolls where BJP has not done well.

    on Aug 26, 2014
  • Srinivas Dharani

    What hogwash. the writer just wanted to prove that he too could write apiece and did a cut & paste job of many articles by left liberals. no originality

    on Aug 26, 2014
  • Pravin Gandhi

    What a Duh stmt! If there are many parties, obviously vote share of winner will be less. On same lines, Cong vote share was 20%, so 80% didnt vote Cong

    on Aug 26, 2014
  • Jeevan Nair

    An excellent article. Very true to the existing ground realities. But then, of course, truth hurts and make some folks angry.

    on Aug 26, 2014
  • Sithanthi Alfred

    The article is simple,direct and completely objective in its view and only fools will find fault with this true assessment of BJP Government under Modi.The article is unbiased and could actually help the Government try a new strategy to overcome their obvious limitations which is hindering them from accomplishing their own vision of development. I couldn't disagree with even a single point mentioned by the writer .Kudos.

    on Aug 26, 2014
  • Lp

    Mr Das has written some good books. He should probably write more of those, rather than trying his hand at copying-pasting arguments which have been bandied about by \'secular\' types almost 3 months ago!

    on Aug 26, 2014
  • Harish

    Rubbish article

    on Aug 26, 2014