Commentary / World

Dynamic Modi faces daunting challenges

by Curtis S. Chin and Meera Kumar

Special To The Japan Times

With India Prime Minister Narendra Modi having completed a landmark trip to Japan and now more than 100 days in office, the hard work now begins of turning economic rhetoric into reality. As on Aug. 15, when Modi marked India’s independence day by delivering his first “Address to the Nation” from the ramparts of India’s historic Red Fort, he lived up to his reputation during his Japan visit for an ability to communicate with an audience, reaching out to political, business and other leaders.

It remains to be seen, however, what changes India’s most dynamic leader in recent years can bring about in a country too often wedded to the past, and still desperately in need of overhaul. Or, as Russell Green, the Clayton Fellow at Rice University’s Baker Institute and a former U.S. Treasury attache to India, puts it: “Modi has made a fast start on both weedy implementation and broader reforms — not house-on-fire fast, but still impressive. He though has yet to explain his big economic reform vision in enough detail to revive corporate investment and pull the public onboard.”

The victory of the Bhartiya Janata Party (BJP) and the ascent of Modi took many political pundits by surprise for few predicted this “India Spring” and that the demise of the Congress Party, in power for decades, would be so dramatic. As with Indonesia soon also to be under a new president, it is a compliment to India that the transfer of power has been smooth and in accordance with constitutional law.

But winning power is distinctly different from retaining power and in India, a complex nation where the demographics lean heavily toward the young, the Modi government will have to be very mindful of the nation’s great and rising expectations. This younger generation has grown up in an age of television and access to information that, in turn, has given them the audacity to dream and aspire. Unmet aspirations in this noisiest of democracies could well send the latest ruling party back into the political wilderness. While power has been acquired, it now needs to be maintained.

Here are four considerations on which Indians as well as Japanese and other foreign business leaders and would-be investors in the nation should measure the country’s new leadership.

First, and above all, is the question of economic growth and macro-economic stability. With 50 percent of India’s population under the age of 30, job creation must be foremost in the minds of the nation’s leaders. Nothing, after all, is more dangerous than unemployed youth roving the streets, their frustrations rising and, sooner or later, finding expression in public disharmony.

Once unleashed, this can be very hard to control. For the past five years the Congress Party allowed growth to slip. The new prime minister must remember that growth is not India’s birthright; not something that will automatically happen unless nurtured.

Concurrent with the emphasis on growth is the need for macro-economic stability. The past government’s breathless attempts to win the population’s goodwill through subsidies and by creating welfare programs have emptied the coffers. Such populist programs are unsustainable. It is time for India’s leaders to come to terms with economic fundamentals and budget deficits, and restore macroeconomic stability.

Second, India has adopted the institutional structure of a modern democratic state; now it is important to ensure these institutions function in an honest and credible manner. In the recent past, governance has weakened, and institutions have been hollowed out by corruption and rendered dysfunctional. If the public cannot trust the judiciary, or have faith that the police force works in their interest, it will resort to unfair means to achieve its goals. The primary working of this network of institutions required to adjudicate in conflict situations must be fair and just; it must not bend to the will of those in power.

If business, domestic and foreign, are to invest in the India described so eloquently at the doors of the Red Fort, Modi must address head-on a plethora of issues that relate to the high level of corruption and poor governance, which keep the nation low on the ranks of the World Bank’s annual Doing Business survey. (India dropped from 131 to 134 in the latest World Bank ranking of 189 economies.) Such ills have eaten into the very core of Indian society, with tales of the unpunished and hubris among the ruling class now legion.

After all, if no one gets punished for wrongs when evidence is clear, documented and apparent, it can only lead to a disregard for the very institutions without which a modern democratic state cannot survive. Such was the hubris among the elite and powerful that they could subvert any law or regulation merely by calling on those who had the power to protect them.

Third is the deplorable state of India’s core infrastructure. Insufficient change has come to it despite hundreds of millions of dollars from development agencies and banks. In the India of today, much like the India of yesterday, even in urban areas access to water and to reliable electricity cannot be counted on.

Toilets on a per capita basis are deplorably low; many rivers are little more than sewers and schoolchildren cannot do their homework because there is no power in the evenings. Health and morbidity directly affect productivity; human dignity is the basis for building a cohesive society that thinks for the nation, not just for itself.

Finally, an urgent task awaiting the new government is the need to build cohesion out of diversity. The Muslim population of India is close to 15 percent and this community is a vibrant part of India. Yet, on every economic and social measure, it ranks low. While the reasons for this are complex, the reality of their weaker economic and political power has rendered many disgruntled and with a sense of being marginalized.

The new government must focus on this community’s grievances and demonstrate an approach that is inclusive and credible to the Muslim population. One can always believe in one’s virtue; what counts is that others believe in you. Governments are often defined by their failures, and given what was seen by many as anti-Muslim rhetoric during the Modi campaign, real progress in addressing this community’s specific needs as part of an “all India” economic drive can help prove naysayers wrong.

In India, democracy defines itself by its ability to “get the government.” The Modi government should continue to bear that in mind as it moves forward to manage, if not meet, the incredible expectations that its election has engendered among not just foreign business leaders in Japan and elsewhere but also its own people.

Curtis S. Chin, a former U.S. ambassador to the Asian Development Bank, is senior fellow, Asia, at the Milken Institute and a managing director of advisory firm RiverPeak Group, LLC. Meera Kumar, a former staff member of the ADB, is a New York-based freelance writer and communications consultant. Follow Curtis on Twitter at @CurtisSChin and Meera at @MeeraKumar212.

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