Narendra Modi: Dubious politics, Good Economics by Amulya Ganguli SignUp
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Narendra Modi: Dubious politics, Good Economics
by Amulya Ganguli Bookmark and Share
Narendra Modi's victory has been ascribed to two factors - an unsubtle exploitation of Hindu communal sentiments and an admirable record of economic development.

While the first can be described as the standard defining characteristic of his Bharatiya Janata Party (BJP), the second reason is new in Indian politics. It is also all the more unusual because the growth has been the result of market-friendly policies, marking a sharp departure from the country's customary, if unrewarding, faith in "socialism".

The Gujarat chief minister, therefore, can be said to have charted a new course with the potential of setting a trend that can be of immense benefit to the country.

The difference between his approach and that of the Manmohan Singh government is that the latter has been diffident about the pro-capitalist economic reforms that Singh initiated as the finance minister in 1991.

However, both he and his party, the Congress, have been somewhat apologetic about the endeavour, presumably because it went against the party's policy of establishing a "socialistic pattern of society", enunciated in 1955.

Their sense of having done something wrong and even harmful was accentuated by the Congress's 1996 defeat that was ascribed by the "socialists" in the organisation to Singh's pro-rich and pro-business economic reforms.

This point of view was strengthened in the Left-oriented political class by the defeat of the Andhra Pradesh chief minister Chandrababu Naidu, who had also tried to break away from the usual public sector- and subsidy-based approach to the economic scene.

While the private sector was shunned by this group of politicians because of its profit-oriented attitude, free power for the farmers and a wide range subsidies - whether fertilisers or food grains - were their mantra for electoral success, notwithstanding the well-known resultant wastage.

Even after the Congress returned to power in 2004 and Manmohan Singh picked up the thread of his earlier economic reforms, the Congress still seemed hesitant with one of its ministers, Mani Shankar Aiyar, even saying that if he was a socialist earlier, the reforms had turned him into a Communist.

What was more, the high growth rate was constantly criticized for not benefiting a wider section of the people. "High growth, low development" was a typical headline in a Left-leaning newspaper.

Modi has turned this view upside down. Not only that, he has shown that a high growth rate - Gujarat grew at the rate of 10.6 percent in the Tenth Plan period - pays electoral dividends. The fear of the "socialists" that since the reforms supposedly make the rich grow richer and the poor poorer and is, therefore, politically disastrous is evidently without basis.

Clearly, the people are wiser than the hidebound politicians because they know that a booming economy cannot but create more and more jobs and ultimately be of benefit to all.

Modi's other achievement has been to crack down on corruption, which is inevitable in an economy of "free lunches", where electric supply, for instance, is illegally tapped, and focussing on attracting investment and infrastructure.

Not surprisingly, his electoral success has now persuaded several chief ministers to ask the central government to allow them to implement the rules prevalent in the Special Economic Zones (SEZs) in Gujarat. But since these include less stringent labour laws than in the other states, the centre, dependent as it is on the Left, may not agree.

But the message has gone through that, notwithstanding the admittedly slow trickling down of benefits, a high growth rate is preferable to a low one. Even before the Gujarat polls, the politicians were slowly realising, especially after Lalu Yadav's defeat in Bihar, that the neglect of development could cost them dearly and that the provision of 'bijli, sadak and pani' (electricity, roads and drinking water) was essential for success.

But preoccupied as they were with their caste and communal calculations, they persisted with their old policies of promising quotas and favouring subsidies.

It was in keeping with such a populist approach that the central government initiated the hugely expensive rural employment policy even though it was known that much of the payments would be siphoned off and that few durable assets would be built.

While the Left predictably applauded the wasteful employment programme, it also put pressure on the government to put disinvestments on hold and scuttle several other polices relating to pension fund, insurance and labour reforms.

It is not impossible that Modi's success will enable the central government to revive the currently stalled process of reforms, considering that it is now obvious that growth is not only economically, but also politically, beneficial.

The Left itself is not unaware of this fact as the conduct of Marxist Chief Minister Buddhadev Bhattacharjee in West Bengal shows. He has been quite uninhibited in his pursuit of pro-private sector policies although he has committed a few blunders, as over land acquisition in Nandigram, on the way.

Even if Modi's anti-minority bias and the reprehensible role of his government in the Gujarat riots of 2002 are to be deplored, his success in driving yet another nail in the coffin of "socialism" and making the political class aware of the fact that capitalist economic growth is better than socialist stagnation are laudable. For this achievement, he deserves at least two cheers.

(Amulya Ganguli is a political analyst. He can be reached at
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