Vijay Kumar Gaba

In our view, should the campaign of Mr. Modi be successful and he eventually becomes the prime minister, it would mark a watershed in the history of independence India, the same way as the ascent of Mrs. Indira Gandhi to the post did more than four decades ago.

It is therefore important to understand what the candidature of Mr. Modi means for BJP as a political party; for Indian politics; and for Indian economy.

Short term - Credible face to opposition campaign

In the immediate term, Mr. Modi’s leadership provides a strong, decisive, and marketable face to the BJP’s campaign that was missing in post Vajpayee period. This has certainly lifted the sagging spirits of BJP cadre and made the floating voters thoughtful.

This should certainly help BJP in state assembly elections to be held in next 2months. As most recent opinion polls have suggested, confirming the findings of our “Discover India” trip this summer (see side bar), BJP is likely to win at least three out of 4 states going for polls.

This timely decision also provides sufficient time for non-aligned parties like AIDMK, TDP, TMC etc. to make an assessment. In our view, as the wave in favor of Mr. Modi gathers more momentum, many regional parties may come closer to BJP or at least move further away from the Congress Party.

Long term – changing the fabric of Indian political structure

However, the implication of this development could be much more significant on a longer term basis. This move could potentially culminate in creation of a sustainable alternative to the Congress Party – a process that started in 1975.

In our view, the probability of this happening over next decade, should Modi become PM, would be close to certainty. This essentially means that de facto federalization of Indian political structure would take place at an accelerated pace. This would boost Indian economy much more than all the economic reforms implemented and conceived so far.

Debate over BJP’s internal dissention meaningless

Insofar as the debate over Modi vs. L. K. Advani is concerned, it is pertinent to remember that this debate has always been there in the form of Advani vs. Vajpayee. The only difference is that this time Mr. Advani has assumed the “secular” role, traditionally associated with Mr. Vajpayee. The acceptance of Mr. Advani to the parties like JDU and SP as “secular” face of BJP is indeed an encouraging sign for BJP as it keeps the door open, should BJP fail to win 185 Lok Sabha seats on its own.

Congress in a bind

Announcement of Modi’s candidature has certainly put Congress in a bind. It now faces a serious problem. It would want to hide Rahul Gandhi to avoid a presidential like contest, in which Modi would be a strong favorite. It would not want to project Dr. Singh either, as his popularity has hit the nadir. And Mrs. Sonia Gandhi still does not appear to assume the responsibility.

Modi most popular choice

Almost all opinion polls conducted in past one month have suggested that Narendra Modi is the most popular PMship candidate, especially in the states going to polls this winter. No national or regional leader is coming even close to him. Incumbent prime minister and Rahul Gandhi have scored much less on the popularity scale as compared to Mr. Modi. Others like Nitish Kumar, Mulayam Singh, etc. also seem to have only marginal support.

…but the support not yet fully affirmative

Mr. Modi is ostensibly preferred as someone who could instantly bring India back on faster and sustainable economic growth path, besides ensuring a clean, transparent, responsive and accountable administration.

However, the interesting part is that none of the people we spoke to (certainly a tiny and unscientific sample) appeared to have any clue about his economic policies & programs, and development agenda.

Everyone repeated the much publicized media headlines that under his rule Gujarat has made tremendous economic progress.

This to our mind is little disconcerting.

…which allows Congress to set the election agenda

Firstly, this allows Congress to set the election agenda to which BJP and most regional parties will just be responding. Remember, Mayawati committed the same mistake in UP elections last year. She just responded to the agenda dictated by Congress, rather than setting her own agenda, and lost badly.

Given, the present economic mess and governance issue, the Congress would obviously like the agenda to be social rather than economic, where Sonia Gandhi has inarguably emerged as the champion, even better than “Garibi Hatao fame Mrs. Indira Gandhi’.

… inhibits non-aligned parties to commit before elections

Secondly, this inhibits non-aligned parties from coming closer to BJP. In absence of a clear forward looking and articulately presented economic agenda, BJP would continue to be associated with its traditional social and religious agenda which does not suit many of the potential regional allies in their local constituencies.

An overtly laid out exclusive socio-economic agenda would provide a platform of common minimum program (CMP) on which a larger NDA could be rebuilt.

BJP would need strong allies in Andhra Pradesh, Tamil Nadu, West Bengal, and Karnataka to have a realistic chance to forming a stable government. Our feedback suggest that a clearly spelt CMP could get BJP pre-poll support of TDP, AIDMK, TMC and JD(S). 25-28 seats in UP could get them support of BSP post polls.

…and makes BJP vulnerable to over expectations

Last but not the least, this makes Modi and BJP vulnerable to over expectation (remember V. P. Singh,1989, Manmohan Singh, 2009, Akhilesh Yadav, 2012).

Modi’s economic agenda still not clear

In our view, it is important to understand what a regime change at the center would mean for the Indian economy, especially if the change leads to Mr. Narendra Modi becoming prime minister. As suggested earlier, not many people we spoke to were clear about the economic policies, programs and agenda of BJP in general and Mr. Narendra Modi in particular.

NDA and UPA have followed the same economic agenda so far

In our view, presently India is struggling with the limitations of the Nehruvian model of economic development that we have followed since independence. Even BJP, when it came to power, decided to leave the alternative model “integrated humanism” proposed by its ideologue Mr. Deendayal Upadhyaya and followed a variant of Nehruvian model terming it “Gandhian Socialism”.

The current variant of the Nehruvian model is largely a distortion of the classical Keynesian model that advocates a larger role for the private enterprise with active state intervention during extremities of business cycle and argues against higher savings in both private and public sector. The Keynesian model has its genesis in the great depression and mostly found useful during larger economic crisis.

Modi seemingly favors Laissez-faire

However, Modi seems to be an advocate of Laissez-faire or free market which entails minimal state intervention even during crisis. He has implemented the model in Gujarat with limited success. But it is pertinent to note that unlike many other states, Gujarat has a history of 200years of industrialization and 60mn people who are globally recognized for their enterprising skills.

This is certainly not the case for most parts of the rest of the country.

It is therefore important to evaluate whether the Gujarat model could be replicated at the national level, or in other words whether Modi can deliver the same results as Prime Minister what he has delivered as Chief Minister of Gujarat.

…which may not be relevant to a large part of India

In our view, considering the present state of socio-economic development of various parts of the country, it would be 10-15years too early to test the Laissez-faire model at the pan-India level.

Modi’s Gujarat model therefore may need significant adjustments at the national level. Perhaps an amalgam of Gujarat’s Laissez-faire and Chhattisgarh’s socialist models could provide a more workable model at this point in time.

But at the same time the Gujarat model should not become his limitation also. Modi has very successfully demonstrated his strategy skills in past one decade. It would be totally wrong to assume that he would not be able to adapt to the larger responsibility and formulate an appropriate strategy for integrated development of the country.

Gandhian “India lives in her villages” model most relevant

In our view, given the almost unmanageable socio-economic diversity of India, the model propagated by Mahatama Gandhi is still the most, and perhaps the only, relevant economic development for the country, viz., focusing on domestic strengths rather than weaknesses and building the economy bottom up beginning with Village economy.

Nehruvian model has not attained desired success

As suggested earlier, the Nehruvian model of large industry led growth with active state participation has mostly failed in evolving a strong structural base for the Indian economy in past more than 6 decades.

Consequently, we still continue to be an economy largely dependent on labor & resource arbitrage and trading. We have failed in making significant progress in the areas such as technological advancement, productivity gains, innovation and localization.

…for the following reasons

In our assessment the following factors could be largely responsible for our economic shortcomings in the post independence period.

1.       Over emphasis on weaknesses and ignoring strengths.

2.       Over emphasis on “provision” rather than enablement.

3.       Failure to develop a truly federal structure of governance as mandated by the Constitution.

4.       Failure to develop an environment of mutual trust and faith between the political establishment and people in general.

Modi has raised hope for a change

We can hope the things to change in any substantial manner only if material corrections are made to the current economic model. Narendra Modi has indeed raised hopes.

 A mission scale program to reverse the flow of trade to pre British era is what we need to ensure inclusive, equitable, sustainable and faster economic growth.

New 20 point program

We suggest the following 20 point program that could help transition to the new economic model for sustainable, equitable, inclusive and faster economic growth by 2020.

This program is based on three basic objectives:

(a)   Develop an environment of mutual trust through decentralization of power.

(b)   Focus on the strengths while taking care of weaknesses.

(c)   Enable the youth rather than just keeping to provide for them

New 20 point program

1.       Overhaul education system to make it job oriented. Inculcate enterprising skills in students from primary level.

2.       Skill youth.

3.       Promote co-operation movement in industry.

4.       Enhance agro productivity to highest level. Promote collective and commercial farming.

5.       Enforce energy efficiency.

6.       Make at least 5 global education clusters by creating special zones.

7.       Make at least 5 world class international tourism centers.

8.       Stop river waters from flowing into sea.

9.       Give equity in natural resources to local population.

10.   Transform RTE into “Right to equal and uniform education”.

11.   Minimize the size of central and state governments.

12.   Devolve powers to Panchayti Raj Institutions.

13.   Reform police force.

14.   Declare sports an industry.

15.   Invest in conservation of Indian culture and traditions.

16.   Enforce fiscal discipline legally and constitutionally.

17.   Make public offices unremunerative by stripping most discretion.

18.   Implement electoral reforms, especially state funding of elections.

19.   Introduce inheritance tax.

20.   Introduce GST, abolish octroi and entry tax, abolish toll on less than 6 lane roads and highways.

BJP would need to do well in UP and gain allies in South for a home run