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India hopeful seeks ‘Thatcherite’ revolution

Narendra Modi, likely next leader, seen cutting size of government

Reuters, AFP-JIJI, Kyodo

When Indian opposition leader Narendra Modi gave a speech on the virtues of smaller government and privatization on April 8 last year, supporters called him an ideological heir to former British Prime Minister Margaret Thatcher, who died that day.

Modi, favorite to form India’s next government, has yet to unveil any detailed economic plans, but it is clear that some of his closest advisers and many campaign workers have Thatcherite ambitions for him.

India’s parliamentary elections began Monday, mainly pitting the ruling Congress party against Modi’s Hindu nationalist Bharatiya Janata Party, which has led in pre-election surveys.

The rise of Modi, one of India’s most polarizing figures, has split even his own party, where worries about his controversial past and abrasive personality meant he had to overcome heavy internal dissent.

The son of low-caste parents from western Gujarat state, Modi is a yoga lover and strict vegetarian described as a “monk with a mission” in a recent biography. He is steeped in the ideology of Hindu nationalism, having joined the Rashtriya Swayamsevak Sangh (RSS) as a boy. Committed to defending Hindu culture, the RSS has been banned twice by the government.

While he has campaigned on a platform of good governance and economic revival, Modi’s links to anti-Muslim violence in Gujarat in 2002, in which more than 1,000 people died, are his biggest handicap.

He was chief minister when riots broke out and, although he has never been found guilty of wrongdoing, the failure of his administration to control the violence left a legacy of distrust and suspicion.

His refusal to apologize and his decision to appoint a woman to his Cabinet who was later found guilty of orchestrating some of the worst of the killing added to the rancor.

The United States, as well as European powers, boycotted him for more than a decade.

His supporters dismiss criticism of Modi over the riots. For them, Modi stands for economic freedom.

“If you define Thatcherism as less government, free enterprise, then there is no difference between ‘Modi-nomics’ and Thatcherism,” said Deepak Kanth, a London-based banker now collecting funds as a volunteer for the BJP.

Kanth, who says he is on the economic right, is one of several hundred volunteers with a similar philosophy working for Modi in campaign war rooms across the country. Among them are alumni of Goldman Sachs and JP Morgan trading floors.

“What Thatcher did with financial market reforms, you can expect a similar thing with infrastructure in India under Modi,” he said, referring to Thatcher’s trademark “Big Bang” of sudden financial deregulation in 1986.

Modi’s inner circle also includes prominent economists and industrialists who share a desire to see the BJP draw a line under India’s socialist past, cut welfare and reduce the role of government in business.

The BJP is expected to make populist pledges to create a massive number of manufacturing jobs and to restart India’s $1 trillion infrastructure development program.

But conversations with top policy advisers to Modi suggest an agenda that goes further than the upcoming campaign manifesto, including plans to overhaul national welfare programs. There is also a fierce debate inside his team about privatizing some flagship state-run firms, including loss-making Air India.

Bibek Debroy, a prominent Indian economist speaking for the first time about his role advising Modi during the campaign, said the Hindu nationalist leader shared his market-driven policy platform and opposed handouts. “It is essentially a belief that people don’t need doles and don’t need subsidies,” Debroy said. Instead, the government should focus on building infrastructure to ease poverty.

Senior BJP leader Arun Jaitley, the man often tipped to be the finance minister in a future Modi Cabinet, said the party would not do away with welfare programs entirely.

How far Modi can go down this road if he is elected will depend on allies in what is likely to be a coalition government.

But the mere possibility that India may shift to the right has brought free-market champions flocking home from high-flying careers abroad to join Modi’s campaign.

Two advisers said partial or total privatizations of Air India and other failing public-sector enterprises were being debated.

Possible opposition by allies in government, as well as India’s strong labor laws, mean it may be some time before these policies can be enacted.

“If you say is it going to happen in 2014-15, is the finance minister going to stand up and announce privatization, I’m inclined to think no, but will it figure eventually? The answer is yes,” said Debroy, author of a book on the economy of Gujarat, the state Modi has governed for more than a decade.

Although India adopted free market reforms 20 years ago, the man responsible for them, current Prime Minister Manmohan Singh, has refocused on redistribution of wealth in recent years under the influence of Congress party chief Sonia Gandhi.

If the Congress party wins, Gandhi’s son, Rahul, will become prime minister, but the 43-year-old appears set to lead his party to a crushing defeat.

He was 14 when his grandmother, Prime Minister Indira Gandhi, was slain by her Sikh bodyguards in 1984 as revenge for the storming of the Golden Temple in Amritsar.

His father, Rajiv Gandhi, was then pressed to take over as leader. Seven years later, Rajiv was assassinated by a Tamil suicide bomber.

After office jobs in London and Mumbai, he was sucked into politics himself and entered parliament in 2004 in a seat vacated by his mother.

He has rejected offers to enter government, instead promoting causes such as right-to-information legislation he regards as key to curbing rampant corruption and a food security bill that critics say India can ill afford.

He has been at his most impassioned defending the secular tradition personified by his great-grandfather Jawaharal Nehru, India’s first prime minister, whose socialist model framed the post-independence economy.

Gandhi objects to Modi’s message that India needs a strongman leader, seeing it as a dangerous fallacy to believe “one man can solve the country’s problems.”

The battle of ideas between Modi and the Congress party was mirrored in a public spat between two well-known economists of Indian origin, Nobel laureate Amartya Sen and Columbia University’s Jagdish Bhagwati. Sen’s belief that public spending on food subsidies and health was needed to end poverty was adopted by Gandhi. The result was a proliferation of welfare programs, notably a rural work program and a giant subsidized food plan.

Modi’s economic thinking is closer to Bhagwati, who strongly advocates poverty reduction through deregulation-led growth. Bhagwati’s colleague and writing partner, Arvind Panagariya, a former chief economist at the Asian Development Bank, is tipped by some in the BJP for a role in any Modi government.

The Congress party’s rural job program is credited with lifting rural wages and reducing migration to cities. But critics, including Panagariya, believe the jobs it created — such as maintaining irrigation ponds and village roads — were unproductive.

These ideas have found traction in Modi’s circle of advisers, who propose tying such programs to skills training and putting employees to work on building highways or sanitation projects.

Others in the group propose doing away altogether with dozens of centrally funded programs.

The parallels with Thatcher don’t end with economics.

Like her, Modi is a small-town outsider to the capital’s political circles and has a reputation for riding roughshod over opponents, who often pillory him as authoritarian. In Gujarat, critics say he runs a one-man government.

For better or for worse, many Indians fed up with years of weak leadership, find that no-nonsense image part of his appeal.