The Billionaire Raj

by James Crabtree

  When he entered office, Modi pledged to push power away from Delhi and back down towards the people. Yet in practice he has proved to be an arch-centralizer, drawing decisions upwards to the PMO, as if measuring himself against the complexities of running so vast a nation. Before his election some observers predicted that Modi would become a market-friendly kind of reformer, keen to push back the boundaries of an over-mighty government. Instead, as it had been in Gujarat, his chosen self-image was of a kind of no-nonsense chief executive, but one perfectly at ease wielding state power. “The PM admires Lee Kuan Yew, and his attitude is a bit like the chewing gum ban,” one of Modi’s more senior advisers once told me, referring to Singapore’s first prime minister and the kind of autocratic crackdowns for which he was famed. “The point of the ban wasn’t that Lee cared about gum. It was that he wanted to show that the government was in charge, down to the smallest detail. In India, when things are always so up in the air, that’s what he [Modi] wants to do too.”

  His record of economic control is on the face of it impressive. Growth has purred along at levels most other world leaders would envy. India’s historically rocky finances have turned stable, while its haywire inflation has gradually fallen. Power cuts have grown rarer, foreign investment rules have been liberalized, and a few costly subsidy programs have been trimmed back. The prime minister has proved especially indefatigable in the production of initiatives: Swachh Bharat, to clean streets and build indoor toilets; “Digital India,” to boost online access; and “Skill India,” to train workers. There are to be a hundred “smart cities,” and a new $3 billion scheme to cleanse the sacred but filthy river Ganges. Most important is “Make in India,” a flashy program aiming to jump-start India’s struggling export sector by courting multinationals and fixing rules that have made it hard to run factories. A long-awaited national sales tax, the GST, has been brought in too, part of an effort to turn India into a single subcontinental economy, rather than a collection of twenty-nine separate states. Foreigners are pumping in record investment while big multinationals—Alibaba, Amazon, Apple, Foxconn, Uber, Vodafone—talk up their Indian futures.

  Yet there is also an odd pattern to Modi’s rule, in which a leader who revels in his own strength has turned out not to be terribly courageous. From the start there was no “team of rivals,” as he fashioned a cabinet filled largely with also-rans. Economists have harped on about the need for structural economic reforms, for instance making it easier to hire workers, buy land, or pay taxes. But all these fights involve bruising battles, and Modi has more often decided to hoard his political capital instead. This timidity is evident in his dealings with state governments too, many of which are run by chief ministers from his own political party, and owe much of their popularity to the prime minister himself. When he has picked a major fight, as with his bold demonetization experiment, the results have often turned out to be little short of disastrous.

  Efforts to change land and labor laws have stalled and been kicked downwards to the states. A vast army of cheap labor, which ought to be one of the country’s greatest blessings, has gradually come to be viewed as a curse. India needs to create at least ten million jobs a year for the army of young people arriving in its labor market. Instead it is creating almost none.37 Rather than an east-Asian-style export boom, manufacturing’s share of output has barely budged. Fearful domestic manufacturers have begun shunning youthful workers in favor of robots. As time ticks onwards, Modi’s many targets—to train half a billion workers, bring power to every village, and dramatically raise manufacturing export levels—remain far out of reach. Promises to canter up to fiftieth place in the World Bank’s “ease of doing business” rankings have proved hopelessly ambitious.38 Meanwhile, the holy waters of the Ganges flow onwards to the sea as putrid as ever, and Modi’s government appears powerless to stop the thick, acrid pollution that chokes New Delhi each winter.

  It didn’t take long before doubts began to set in. Arun Shourie, a brainy ex-BJP minister and onetime Modi admirer, put these most waspishly. “When all is said and done,” he wrote in 2015, “more is said than done.”39 Modi’s many initiatives have a habit of delivering much less than they promised. Plans to reform the state have gone the same way. The prime minister made his name back in Gujarat by shaking up struggling public sector enterprises, cutting costs, and hiring in better management. During 2014’s election he promised “maximum governance, minimum government,” a phrase that raised hopes that a wave of privatizations would soon reshape a sclerotic state. But in office Modi has proved cautious, avoiding big shifts in the public sector, which still accounts for one-sixth of economic output and employs millions of potentially restive workers.40 Some of the more liberal voices around the BJP argued for steep cuts to Congress-era welfare schemes, which subsidize everything from rural jobs to food distribution.41 Modi ignored most of these ideas too.

  Modi’s tenure has included many promising initiatives, including both the GST and Aadhaar, a vast biometric identity card system, which has helped hundreds of millions access better government services. His allies claim further, bolder measures are not feasible. The BJP holds a majority in parliament’s lower house, but not the upper, so laws cannot be rammed through. Instead Modi has to bargain with awkward state governments, while also grappling with other powerful forces which often block economic change in India, from trade unions and farmers to small businesses. This is the reason India is often described as having a weak state but a strong society: a social order that “successfully curbed and blunted the ambitions of political power, and made it extraordinarily resistant to political moulding,” as academic Sunil Khilnani once put it.42 The BJP once before ran a government that pushed economically liberal ideas, only to lose an election in 2004 that it was widely expected to win. Modi has learned that lesson. He governs as a populist, in the sense that he enjoys being popular, and has steered clear of divisive “big bang” reforms. Over a decade and a half in public life, he has never once lost an election. He does not intend to start now.

  The most dispiriting episodes have occurred when Modi had easy opportunities to push forward with development reforms and yet still opted not to do so. One came after his sweeping election victory in UP in 2017, when he picked Yogi Adityanath, a radical Hindu preacher, as the state’s next chief minister. The move shocked even seasoned political observers. I had met Adityanath at his temple complex in the depressed eastern city of Gorakhpur at the height of the election campaign, about a month before his appointment.43 Outside, the scene was peaceful: elderly sadhus sat praying on the floor of buildings nearby, while the scent from the temple’s flower gardens wafted through the air. Inside, Adityanath sat alone on a saffron-colored couch at the front of a large windowless meeting room, wearing his trademark orange robes.

  Shaven headed and in his mid-forties, he spoke that morning in calm, measured tones, sitting below a large portrait of one of his predecessors as chief priest. But the previous evening I had watched as he whipped up a crowd of hundreds of frenzied supporters at a nearby street rally, blaming the city’s many problems on an influx of poor workers from nearby states. Adityanath showed little interest in economics, preferring fiery anti-Muslim speeches and divisive cow protection campaigns. Over two decades he had used these talents to move from firebrand priest to political power broker, founding his own vigilante group and rising to become a BJP member of parliament in New Delhi.

  After the fact, Modi’s supporters made various excuses following the appointment, saying the prime minister was simply responding to the preacher’s local popularity, and stressing that his administration would still push improved economic management. Yet having just won a thumping election victory, and with his personal authority at its zenith, Modi still picked a man who delighted Hindu extremists but dismayed economic and social liberals alike. He could easily have spent some of his political capital and installed a more qualified figure, capable of grappling w
ith the state’s vast problems of joblessness and poverty. The decision was explicable only in raw electoral terms, although it was no less dismal for that: Modi wanted to win UP in 2019’s national election and he knew Adityanath would help him to consolidate his Hindu base in the state. The appointment was one further example of a pattern that has marked Modi’s period in power. In New Delhi, he has struck terror into ministers and bureaucrats alike, and appears to be able to get them to do almost anything he wants. But when it comes to confronting hard-liners within his own party, those same powers of intimidation and persuasion mysteriously vanish.

  A second example came with the downfall of Raghuram Rajan, following his surprise resignation in the middle of 2016.44 Rajan by that point had led India’s central bank for nearly three years, battling inflation and beginning to bring problems of bad bank debts under control. Yet as governor of the Reserve Bank of India he also spoke out on an eclectic range of further topics, including one notably pointed address in October 2015. In front of an audience at his alma mater, the Indian Institute of Technology in Delhi, Rajan gave what amounted to a full-throated economic defense of social liberalism. “India’s tradition of debate and an open spirit of enquiry is critical for its economic progress,” he told the assembled students. “Tolerance means not being so insecure about one’s ideas that one cannot subject them to challenge.”45

  Whether or not he intended this as a direct gibe against Modi, that was how India’s media took it, splashing the speech in the next day’s headlines. Some of the prime minister’s more extreme allies—including those in the RSS, who were never keen on Rajan to begin with—were incensed, viewing the speech as a direct challenge to their leader’s authority. A whispering campaign began. Subramanian Swamy, a clever but intemperate BJP parliamentarian, dusted down his anti-national playbook and went on the attack, questioning Rajan’s decision to spend most of his career teaching in the United States and implying that his belief in Western economic ideas somehow outweighed his loyalty to his country. In a phrase that became quickly infamous, Swamy in May 2016 described the central bank chief as “mentally not fully Indian,” and called for him to be sacked.46 One month later, in effect, he was.

  Behind the scenes Rajan had asked to serve a second term, as he made clear later in his resignation letter. But one official aware of his discussions told me that he had also asked for the flexibility to serve only part of that term, as some of his predecessors had done before him. This provided a face-saving excuse for Modi’s team to ask Rajan to leave, arguing that they wanted a candidate for a full three-year term. Yet such technicalities did little to hide the truth of the situation, which is that Rajan was fired. This was not because of personal animus with Modi. Indeed, those familiar with their dealings say the two men actually got on reasonably well during their regular meetings. Modi also went out of his way to be complimentary after he left. “Raghuram Rajan’s patriotism is no less than any of ours,” he told Arnab Goswami in their interview. “He is a person who loves the country.” Rather, Rajan was kicked out because he crossed a line with Modi’s hard-core supporters, with whom Modi himself refused to disagree. The result was the needless departure of one of India’s most able advocates for economic reform, making the battle for India’s future, and attempts to push back the forces of corruption and vested economic interests, that little bit harder to win.

  India After Modi

  Narendra Modi is not a man given to displays of doubt, although he did describe the process of wielding power in curiously self-involved terms. “I have given myself completely. I’ve been successful in pulling my entire government,” he told Arnab Goswami, as their interview drew gently to a close. Goswami then posed one final question, asking the prime minister if he might share the anxieties that kept him awake at night. “I don’t live under the burden of worries,” he replied. “[But] I can’t leave the country helpless…For all good and bad things, it is my responsibility.”

  Hopes that these responsibilities of office would transform Modi into a socially tolerant economic reformer were always naive. His personal conversion to the cause of development is sincere, and few doubt the indefatigable energies he has brought to the task of governing. But the fiery teachings of his youth, and the worldview they inspired, remain deeply lodged. Then there are simple questions of politics, as Modi seeks to balance his hopes of delivering unpopular structural reforms against the odds of a handsome future reelection win. Yet even these goals, central though they may be, are subsumed within a larger ideological project: the destruction of Congress as a political force, and its left-wing, secular ideology along with it. In this final task Modi has proved strikingly successful. His victory in 2014 dealt Congress, for so long India’s natural party of government, a crushing and perhaps irreparable blow. Certainly the party has shown few signs of recovery in the years since its defeat, as it staggers along under Rahul Gandhi’s ponderous and diffident leadership.

  The tolerant vision that Mahatma Gandhi and Nehru held dear had been in retreat long before Modi. In truth its decline began not with the BJP but with Nehru’s own daughter, Indira Gandhi, who as prime minister during the 1970s moved to strike deals with any number of caste and community groups, trading her party’s ideals to sustain, at least for a while, its grip on power. Modi’s arrival nonetheless represented a new and fundamental threat to the secular ideals India’s founding fathers held dear. He went on to become the nation’s most forceful prime minister since Indira Gandhi herself, an achievement that, given her authoritarian leanings, should have been as alarming as it was flattering.

  Far from being an economic liberal, the longer he stays in office, the clearer his comfort with state power becomes. He is the kind of leader Americans would call a big-government conservative. Yet here Modi faces a different problem, namely the limitations of the institutions he controls. India’s state has often proved strikingly competent, from its ability to run vast elections to its timely response to natural disasters. It boasts many creditable institutions too, including the country’s central bank and its best universities. But more often than not, these are isolated examples of proficiency. India’s slow-moving legal system, by contrast, had thirty-three million pending cases, as the head of the Supreme Court complained in a tearful speech in 2016.47 At its current pace, another judge has suggested, the backlog would not be cleared for three centuries.48 Meanwhile, New Delhi’s thick smog, now widely agreed to be worse even than Beijing’s, stands as a choking testament to the state’s inability to balance the aims of economic growth, environmental sustainability, and public health.

  The PMO’s pink sandstone corridors house one of the more highly functioning parts of India’s system, staffed by a small band of elite civil servants, whose efforts do much to hold a creaking government machine together. Yet Modi’s habits of centralization mean even they are overloaded. As I walked back into the sunshine after my visit, the contrast with New York’s Michael Bloomberg popped into my head. As mayor, Bloomberg worked from a cubicle in a modern open-plan office space known as the “Bullpen.”49 Stacked with computers and data displays, the place was designed to facilitate easy communication and allow its leaders to make quick decisions, with a particular focus on sucking up real-time data about the state of the city’s public services. By contrast, Modi governed a vastly larger population from an office that seemed stuck in the Victorian era, sitting above a governing machine that conducted its business by shuffling around paper “files,” in which pending decisions were slipped quietly inside green cardboard folders and bound up with string. Modi’s harsher critics often accused him of excessive use of state power. Inside the machine, it was amateurism rather than authoritarianism that appeared to be the greater threat to India’s future.

  Historian Ramachandra Guha has called India’s an “election only” democracy, meaning that the majestic spectacle of its elections hides a less impressive reality in the years in between.50 Par
t of the problem is that India itself, for all the lofty ideals of its constitution, has never actually made the transition to becoming a full liberal democracy, with public institutions capable of guarding in every respect the civil and political rights of its many peoples. Yet it was never exactly an “illiberal democracy” either, in the sense of the phrase coined by author Fareed Zakaria to describe the likes of Turkey and Russia, which hold elections but then actively deny their citizens many important constitutional protections.51 For his critics, the worry was that under Modi India would gradually join this same chorus, drifting towards full illiberal-democracy status, with its secular foundation replaced by some kind of new Hindu majoritarian vision. Before Modi, the worry was that India’s state was incapable of enforcing the liberties its laws carefully enshrined. Now many feared its leadership did not actually want to enforce them.

  These threats of illiberalism should not be exaggerated. Relations between India’s religions and castes have often been far worse than they are today. Nothing during Modi’s tenure in New Delhi comes close to the violence that swept India after the destruction of the Babri Masjid in 1992, or indeed the Gujarat pogrom a decade later. Both ruptures appeared to leave the nation’s secular fabric irretrievably torn, yet after both it was patched back together to some degree. Modi does carry with him the baggage of communal division, but many earlier BJP leaders were more extreme, while there are plenty of alarming figures among the party’s current senior leadership, Yogi Adityanath among them. Modi’s critics might well ponder whether any of India’s crop of plausible alternative leaders would prove more palatable.

  Modi has also never pretended to be a liberal leader, so it should be no surprise that he has failed to govern as one. Instead, he and his lieutenant Amit Shah are tacticians, who understand the power identity politics can play in winning popular support when they need it. Modi’s dramatic experiment with demonetization showed equally clearly his willingness to push extreme populist measures. Yet any future decision to pursue a more overtly Hindu nationalist political strategy would still carry significant political risks. For all of Modi’s present popularity, India’s voters have often moved away from political leaders who appeared to whip up communal discord for brazenly self-interested reasons. In this way there is some hope that the safety valve of democracy itself will guard against a new era of wrenching division. “India’s semi-liberal democracy has survived because of, not despite, its strong regions and varied languages, cultures and even castes,” as Fareed Zakaria put it.