For at least a year now, it has been clear that the Indian economy is not doing well. The rupee is weak, capital is fleeing the country, private domestic investment is laggard, consumption demand is sluggish, manufacturing is stagnant, economic disparities between the rich and the not-so-rich are widening rapidly. The share values of the top IT companies are falling due to the threat that Artificial Intelligence poses to their business model. The mood in the stock market reflects these manifold problems, with the main indices where they were two years ago.
An awareness of these multiple challenges has led to a stream of articles by professional economists urging the Modi government to acknowledge the depth of the problems we face, and initiate appropriate reforms. Such articles have become more frequent after the onset of America’s war on Iran which has led to deep uncertainty in the oil, gas, fertiliser and other commodity markets, adversely affecting our trade balance and creating shortages. The war has also reduced remittances, leading to a further dip in our foreign exchange reserves.
The reforms which economists advocate include making the operations of the customs and tax bureaucracy as well as the Enforcement Directorate less arbitrary and less vindictive, raising public spending on health and education, promoting labour-intensive manufacturing, creating a level playing field for investors so that it is not just a few favoured capitalists who corner the most profitable projects, reducing fertiliser and power subsidies, ending discrimination against states not ruled by the Bharatiya Janata Party, and, not least, replacing the underperforming politicians and bureaucrats who currently man the economy-related ministries of the Union government with more competent and qualified individuals.
The recommendations that our leading policy economists have put forward are aimed at augmenting the welfare and economic security of all Indians regardless of caste, gender, religion, region or political affiliation. To their suggestions I would add one of my own; namely, the need to stem the ongoing degradation of our air, water, soil, and forests.
The question is: will the Union government accept and act substantially on these recommendations? This columnist believes that the answer is likely to be in the negative, if one is to examine what motivates the only two individuals who matter in this government, Prime Minister Narendra Modi and Home Minister Amit Shah.
In my understanding, the prime minister is driven by three principal ambitions. The first is to stay in office as long as possible, and by whatever means required. He is already past the retirement age of 75 that he recommended for elevation into his party’s margdarshak mandal, yet, even as he ages further and his energy declines, he shows no signs of letting go of power. He is driven by the desire to win a fourth successive general election, thus to beat the record of Jawaharlal Nehru, a man he publicly attacks but apparently secretly envies.
Modi’s second ambition is to further promote the personality cult around him. Vast amounts of public money have been spent to burnish his cult, as the ubiquity of his face in petrol pumps, airports, trains, and dozens of other sites controlled by the Union government shows. The prime minister’s vanity is boundless. He wants always to be the centre of attention, to be adored and worshipped wherever he goes.
Modi’s third ambition is to create a Hindu rashtra, whether de facto or de jure. Back in 2014, the prime minister promised to work for ‘Sabka Saath, Sabka Vikas’, but he rapidly abandoned that ideal. He now presents himself as a leader of the Hindus alone. Illustrative here are his roles as master of ceremonies at the inauguration of the Ayodhya Ram temple, and the massive propaganda blitz around the 75th anniversary of the reconstruction of the Somnath temple.
Of Narendra Modi’s three ambitions, Amit Shah entirely shares two; greater political power for himself and the promotion of Hindu majoritarianism. The increasing amount of time he spends in election management and his ever-greater influence in government affairs makes it clear that he no longer sees himself as Modi’s loyal apparatchik, but as Modi’s inevitable political successor.
Like Modi, Amit Shah aims to create a Hindu rashtra in which people of other faiths, and especially Muslims, shall be second-class citizens. However, he pursues this ambition even more ferociously and single-mindedly than his boss. He vilifies Indian Muslims all the time, and in language unbefitting of his position as home minister.
Modi and Shah are obsessed with sustaining and expanding their political power. This they have so far achieved through four distinct, though interrelated, means. The first is through the construction of a consolidated Hindu vote bank whereby, if enough fear is created among Hindus that they shall be overwhelmed by the Muslim minority, some 60% of them will vote for the BJP, leading to an overall vote share around or above 45%, enough to win elections in the first-past-the-post system. The second is the provision of regular payments to groups such as women and farmers which, if even modest, make voters feel that kuch toh mil raha hai (the government is giving us something at least). The third is to capture and weaponise public institutions, such as the Election Commission and the ED. The fourth is to promote a select group of capitalists who, in return for all the exemptions and contracts they get, contribute generously to the BJP’s finances.
Since this is a column prompted by the economic crisis, a further word about the last issue is appropriate. A former chief economic adviser to the Government of India once wrote of the “2A model of stigmatized capitalism” in India. A US government trade representative was slightly less categorical, writing in his memoirs that he had, on the basis of his dealings in India, concluded that fifteen businessmen ran the country, till an Indian friend corrected him, saying they were actually only seven with real influence. Whether 2 or 7 or 15, it is a mere handful of businessmen who benefit disproportionately from the operations of capitalism in India. The country is in effect an oligarchy, whose privileged members get favours from the ruling regime, and recompense these suitably in return.
In June 2013, the Congress was in power at the Centre as well as in 14 states, while the BJP ran just 4 state governments. Thirteen years later, the BJP has won three general elections in succession, and is now in power in 22 states, while the Congress is in power in just 4 on its own (with another two as part of a coalition). This extraordinary turnaround is in part a result of the inept leadership of the Congress, and in greater part a result of the winning formula evolved by the Modi-Shah BJP: namely, Hindutva plus handouts plus compromised institutions plus crony capitalism.
I should also note that this consolidation of power by the Modi-Shah duo has been facilitated by the suppression of the press and the promotion of what is known as the ‘Godi Media’. In the case of television, the regime has gone beyond suppression, turning news anchors into attack dogs charging the Opposition with all sorts of faults and failures while never holding the government to account at all.
Meanwhile, the economy continues to underperform. It may enter into a downward spiral if the Gulf War continues and oil prices rise further. It is in this context that the constructive reform proposals of our policy economists become pertinent and even urgent. The question is whether the government has the will or desire to implement them. It is possible that, to placate the critics and manage the headlines, a few cosmetic changes might be made, such as a cabinet reshuffle which (if the rumour mills are credible) may even involve getting in a non-party professional as finance minister. Yet the real, substantive reforms that are being advocated by experts are altogether unlikely. Given what we know of Narendra Modi and Amit Shah, how would abandoning cronyism and opening up investment to free and unmediated competition, making public institutions more efficient and impartial, appointing technical experts in place of long-time loyalists, ensuring that the rule of law is not undermined at regular intervals by Hindutva goons — how would these at all work to their political or personal advantage?
I admire the economists who have written persuasively about the need for reform. They have performed an important public duty, even though it is very likely that their sensible suggestions will fall on deaf ears. For, at the risk of being accused of pessimism, cynicism and a sense of despair, I must nonetheless state that, for the two most powerful men in India, the country’s long-term economic health does not appear to be a priority at all.
ramachandraguha@yahoo.in