Before his victory, India’s newspapers had salivated over the prospect of a “Modi versus Rahul” battle, as the BJP leader went head-to-head with Rahul Gandhi, Nehru’s grandson. The battle quickly disappointed, however, as Modi painted Gandhi, the handsome but inexperienced Congress figurehead, as an incompetent dynast unfit for high office. The two campaigns were poorly matched, too, as an exhausted Congress struggled to counter Modi’s sophisticated campaign apparatus. “People don’t get that in India there are three different campaigns,” Praveen Chakravarty, a political analyst with ties to the Congress, told me during the 2014 election. “You have the nineteenth-century India of the villages, the twentieth century of the urban middle classes, and now the youth of twenty-first-century India, who use smartphones and want to communicate online.” Modi targeted all three, using mass rallies to reach the first and spending heavily on television adverts for the second. A blanket social media campaign then sought out younger voters via Facebook pages, WhatsApp messages, and a new “NaMo” YouTube channel. Christophe Jaffrelot, a political scientist, dubbed the result a “Modi-centric” campaign, with an unprecedented presidential air. “Modi was projected as the sole leader of the BJP,” he wrote. “The party minimised its collegial character…to promote one man only.”36
Modi’s mass appeal stemmed from his understanding of middle-class aspirations: a job with a salary, a reasonable school for your children, and the chance to buy a motorcycle, or perhaps even a car. He flew by helicopter and private jet, but he visited parts of India long ignored by the BJP, from the very south to the smaller states of the northeast. Polling showed ordinary Indians were worried about finding jobs and rising prices of basic goods, problems Modi pledged to solve with an unrelenting focus on vikas (development). His central theme was corruption, and the epidemic of scams over which the Congress had presided. The rewards of India’s prosperity had grown unbalanced, with rules that favored the super-wealthy and their friends in politics. There were contradictions in Modi’s promises to reverse this trend, not least the fact that he pledged to bring India’s Bollygarchs to heel in a campaign lavishly funded by their donations. Yet in pledging an end to graft, Modi had still found an issue that tied together his own image for probity and the greatest weakness of his scandal-plagued opponents. At the start of 2014, he gave a speech in Amethi in Uttar Pradesh, the Gandhis’ traditional stronghold. “My mantra is I will not eat, and I will not allow others to eat,” he said, bringing roars from the crowd, who knew only too well what “eating” meant.37
Just as America’s Republican Party draws support from a mixture of evangelical Christians, small business owners, and Wall Street financiers, so Modi used this anti-corruption message to build an unusual political coalition of his own, bringing together Hindu religious hard-liners and middle-class moderates. His strength was not that he was a purebred technocrat or a closeted fanatic. Rather he represented both of these things, and did so in a way that offered India the hope of prosperity and a stronger sense of self. “What the BJP promises is not so much the restoration of a Hindu Golden Age as a strong, modern Hindu state with Ayodhya as its Vatican,” as author Ian Buruma once wrote.38 Although Modi’s campaign in 2014 spoke mostly of development, there were still signals for his political base, such as his decision to take a parliamentary seat in Varanasi, one of Hinduism’s holiest cities. An election billboard on Mumbai’s Marine Drive during the election featured a giant image of Modi and the slogan “I am a Hindu Nationalist.” For all of the problems presented by the bloody events of 2002, even the riots explained a measure of his popularity among his own party, who viewed their leader’s stubborn refusal to apologize to his liberal critics as a signal of strength.
As India’s decades of growth dismantled old hierarchies—as lower-caste politicians won political power, and wives and daughters entered the job market—so Modi’s pitch also appealed to the Hindu majority, who wanted to feel pride in their heritage while at the same time enjoying the material prosperity of a modern market economy. His election triumph overturned years of conventional wisdom about the fragmentation of political power. In the three decades since Rajiv Gandhi last won a victory on a similar scale, both the Congress and the BJP had been weakened by regional and caste-based political rivals, and fragile governing coalitions had become the norm in New Delhi. But now Modi had crafted a new and popular nationalism, which drew strength from the decline of the older identity the Congress represented.
Modi’s career had barely begun in 1989, the year when Francis Fukuyama wrote “The End of History,” his essay in the National Interest predicting the triumph of Western-style free-market democracy. “It is not necessary that all societies become successful liberal societies, merely that they end their ideological pretensions of representing different and higher forms of human society,” Fukuyama argued.39 Already a democracy, post-socialist India should have provided a neat test case for the brand of this free-market democratic shift. Indeed, Modi was just the kind of technocratic leader who might have been expected to bring it about.
Yet as India tore down the vestiges of socialism it became rapidly more capitalist but barely, if at all, more liberal. Instead, its citizens turned to a politician who offered the prospect of material prosperity, but also the comfort of a strong sense of Hindu identity and protection against external forces, be they the threat of radical Islamism or the equally unsettling forces of global economic disruption. As American author Robert Kaplan once wrote: “The spirit of India has undergone an uneasy shift in this new era of rampant capitalism and of deadly ethnic and religious tensions, which arise partly as violent reactions against exactly the social homogenization that globalization engenders.”40 Modi was part of a wider pattern, taking his place alongside a wave of conservative, nationalist leaders from Vladimir Putin in Russia and Shinzo Abe in Japan to Recep Tayyip Erdoğan in Turkey, and ultimately, in America, Donald Trump. “I always say that to me secularism means ‘India first,’ ” Modi said in 2012.41
Yet for all of his popularity, Modi’s vision still left many in India deeply uneasy. I headed back to Ahmedabad just before the sun set on election results day in May 2014. On the road south, young men on motorcycles weaved through the traffic, their pillion passengers brandishing BJP flags. Modi had won a clean sweep of all twenty-six seats in his home state that day. But not every part of Gujarat was celebrating, as I discovered when I drove into Juhapura, Ahmedabad’s main all-Muslim ghetto.
Flatbed trucks carrying BJP supporters moved slowly through the streets outside, their speakers booming celebratory dance music. But as the light began to dim, and as the call for Friday prayers echoed out on the first evening of India’s new political era, the narrow streets inside were mostly empty. A teeming city-within-a-city, around seven kilometers south of downtown, Juhapura had roughly 400,000 residents, although its quiet lanes gave it the feel of a village. The area’s population swelled after the 2002 riots, as thousands of Muslims displaced from elsewhere around the state sought safety in numbers, in an area physically walled off from the Hindu majority neighborhoods nearby.
“Muslims living here know all about Modi and the riots but they view him as the cause of many other problems,” explained Waqar Kazi, a local political activist, sipping tea quietly inside his sparsely decorated home.42 “The Modi model of development never came here…[and] because my name is Waqar, I cannot stay outside this area…Ahmedabad is totally divided along religious lines,” he said. As we talked, Kazi seemed anxious about the evening ahead and the risk of violence that the celebrating BJP supporters might bring. Would we mind checking back later that night, he asked, to see if everything was OK?
Modi won his election triumph by promising to bring Gujarat’s successes to India. It was a message that even proved popular with many Muslims, who in 2014 ended up voting for the BJP in larger numbers than usual. For its adherents, Modi’s Gujarat embodied the best of what India was becoming
: a churning entrepôt marked by industrialization and urbanization, a birthplace of billionaires, and home to a developing middle-class, consumerist society. Modi himself was fond of quoting India’s most famous national founder, claiming that his own model of business-friendly development would ultimately benefit the least privileged as well. “Mahatma Gandhi used to say: ‘What is there for the last man?’ ” Modi once told an interviewer. “So my development parameter is very simple. It is about how the poorest of the poor can benefit.”43 Yet after a decade of his rule, little such development had reached Juhapura, whose residents complained of unpaved roads, unreliable water supplies, and inadequate schooling. Kazi remained skeptical even of Modi’s signature promises to combat cronyism, noting the BJP politician’s friendliness with tycoons like Gautam Adani. Muslims in Gujarat, he said, still had to pay bribes most days.
With neat streets and tidy houses, Juhapura itself was not a slum. Rather it was a place that provided sanctuary for Muslims of all backgrounds, from struggling refugees to middle-class professionals and prosperous business owners. In 2002, even Gujarat’s wealthiest Muslims were given a brutal reminder of the perils of living in Hindu neighborhoods. “This isn’t a ghetto in the American sense, with only poor people. It is a ghetto like Jewish areas in nineteenth-century Europe, where all classes were forced to live,” Zahir Janmohamed, an Indian-American author and human rights campaigner who lived in the area, told me. Across the country that night, Modi’s record in Gujarat provided many with a source of hope that India’s path to economic development would now be smoother and that victories would soon be won in its battles against corruption. But in this small corner of his home city, that sentiment was almost exactly reversed, as those who knew it best poured doubts on Modi’s polished image for honesty and good governance, and questioned what he might achieve as he moved to New Delhi. “You hear people here say that the only good thing about this election is that Modi won’t be our chief minister anymore, so things will get better for us,” Janmohamed said. “But will they? For Juhapura, I doubt it.”
CHAPTER 5
THE SEASON OF SCAMS
The Road to Purification
There was an autumn chill in the air as India’s cabinet shuffled into their wood-paneled meeting room in the heart of New Delhi. Dressed in a white shirt and sleeveless jacket, Narendra Modi called proceedings to order, and prepared to make the most dramatic announcement of his first two years as prime minister. Earlier in the day his office had sent out two unusual messages. First, ministerial attendance at that night’s meeting was mandatory. Second, no mobile phones were to be allowed.1 But even as they settled into their seats, with a bland agenda paper dated November 8, 2016, in front of them, almost no one round the table knew what was coming. “I had no idea that such a big move was going to be announced,” Piyush Goyal, the government’s talkative energy minister, said later. “[Then] the finance minister looked at me and smirked. That’s when I realized something was on.”2
Modi’s plan was conceived in strict secrecy. A small team worked for the best part of a year from his residential bungalow, only belatedly bringing a few ministers and central bank officials into the loop.3 “There comes a time in the history of a country’s development when a need is felt for a strong and decisive step,” Modi said in a television address later that night.4 “To break the grip of corruption…we have decided that the 500-rupee and 1,000-rupee currency notes presently in use will no longer be legal tender from midnight.” In a country where almost all transactions were made in cash, this was not just unexpected: it was an earthquake.
Banks would close the next day, Modi explained in his address to the nation. After that, anyone wanting to use the two highest-denomination notes—worth $7 and $14 at the time, and collectively accounting for $220 billion—had to exchange them for new ones. The move caught the media by surprise, distracted by events in that day’s US presidential election. Few experts saw it coming either. “I was absolutely shocked, it was the last thing I expected,” admitted economist Ila Patnaik, who until that year had been one of Modi’s most senior advisers.5
The idea behind what became known as notebandi (demonetization) was simple. India suffered a huge problem of “black money,” meaning cash or wealth on which no tax had been paid. The term covered everything from the proceeds of criminality to the earnings of the respectable middle classes, who merely forgot to declare them to the revenue authorities. That absentmindedness was something of a national habit: only 37 million Indians out of more than 1.2 billion were paying income tax, one of the world’s lowest rates.6 But speaking that evening, Modi focused instead on corruption and crime, arguing that his banknote ban would target illicit wealth held by terrorists and gangsters, as well as bribe-taking government employees, who kept “currency notes stashed under [their] beds.” Anyone with large quantities of illicit cash would be forced to turn it in at the bank and explain where it had come from. “There may be temporary hardships,” he added. “[But] in this movement for purifying our country, will our people not put up with difficulties for a few days?”7
Those difficulties became clear just two days later, when banks reopened and were quickly overwhelmed. Replacement currency had barely begun to be printed, leading to severe shortages. Long lines formed at ATMs, which swiftly emptied. Confusion grew about the rules under which old cash could be deposited and replaced. Economists criticized the move’s implementation and questioned its effectiveness. An almost daily stream of clarifications and rule changes confirmed that Modi and his team had not thought through the details of their experiment. For weeks, newspaper front pages pictured snaking queues, as hundreds of millions endured one of the most disruptive policy changes in modern economic history. And as those queues showed no signs of shortening, a decision that many hailed at first as a masterstroke began to look ever more like a debacle.
Conspiracy theories spread that demonetization was actually a political scam. All political parties relied on under-the-table cash for their election campaigns, the theory went, but the well-funded BJP would cope relatively better than its rivals during the cash crunch, giving it an advantage in forthcoming state elections. But in truth there was a simpler calculation in Modi’s mind: the desire not to be outflanked on corruption. Since taking power in 2014, his government had proved reasonably effective. There had been few genuinely bold economic reforms, but Modi had nonetheless presided over reasonable growth rates, falling inflation, and high poll ratings. On corruption, though, his record was patchier. On the plus side, the mega-scams of the previous Congress government had mostly ceased. Modi’s decision to auction off public assets like coal and spectrum, rather than handing it out to friendly businesses, helped put an end to scandals allocating natural resources too. Business leaders in general praised Modi’s intolerance of influence peddling. “The days when I would wake up to read in the papers about some regulation that mysteriously benefited one of my rivals…those have thankfully stopped,” one billionaire industrialist told me in mid-2015.
For ordinary Indians, however, the tawdry reality of routine bribe-paying seemed little changed. Two years prior to Modi’s election, one poll showed that more than nine in ten still thought their country corrupt.8 In 2016, the country ranked seventy-ninth in the annual Transparency International corruption perceptions index, a score that had barely changed in five years.9 One year later, a second survey from the same organization found that sixty-nine percent of Indians had paid a bribe to access state services during the previous twelve months, the highest rate in Asia.10 Kickbacks and payoffs still dominated large swaths of national life, from land acquisition to public contracts. New anti-graft measures, including an earlier amnesty on black money, proved low profile and ineffective. Corruption in state and local governments remained unchecked, while probes into older scams dragged on without results. Half of those who dealt with the government each year ended up paying bribes, according to another study
.11 A place at a school, a bed in a hospital, a water connection, a birth registration, a marriage license, a death certificate; in India, the very rudiments of life seemed to require illegal payments. Meanwhile almost none of the industrialists who had grown rich by exploiting their ties with the state had been punished. Modi risked being attacked as the leader of a “suit-boot ki sarkar,” a rare memorable phrase from opposition leader Rahul Gandhi, meaning a government of, for and by the suited, crony-capitalist rich.12 Notebandi proved the lengths to which the prime minister was willing to go to avoid this charge, regardless of the costs it imposed on the small businesses normally thought of as part of the BJP’s political base.
A few later weeks later I went into a tailor’s in our neighborhood in Mumbai, on a back street filled with crumbling colonial-era houses. A dozen people were lined up at a cash machine on the far side of the road, one of the few in the area that still had money. Sitting behind his front desk, surrounded by piles of neatly folded shirts ready for collection, the shop’s elderly owner, Mukesh Pahuja, complained that his business had all but collapsed. Sales were down by as much as seventy percent, as customers stopped spending, in an industry dominated by cash. “Everything is black money,” he told me. “In the business of clothes…if you take one good outfit, and embroider it, it will cost one and a half lakh rupees [150,000 rupees or $2,200]. So who pays with a card? Nobody.”
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