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
