India’s Growth Under Modi Salvaged The Democratic Model For Global South

After almost 10 years in power, opinion on Prime Minister Narendra Modi’s government in Delhi is sharply divided.

His detractors allege that “Indian democracy is under threat.” But if you consider the election results, most Indians would disagree with that assessment. 

The truth is that Prime Minister Modi saved ‘democracy’ from losing relevance across the developing South. He has shown the way to make democracy performance-driven, by competing with a totalitarian China that had once caught the imagination of the world for its quick delivery. 

“What’s gone wrong with democracy?” The Economist asked in February 2014. The answer was known. The democratic world failed to ensure growth and prosperity at the pace of a single-party-ruled China.

Democracies gave reasons for their failures but no solution. In short, they lacked a demonstrative effect. The population levels in the West were far lower and even so, they did not give a chance to universal franchise before attaining prosperity. Not to mention that the prosperity was fuelled by colonialism.  

Poor, populous democracies, like India, had no role model before them that could be an example of delivering speedy growth, without sacrificing the political freedom of its citizens.

Global investors and media admired China and even Indians were critical of the country’s slow progress vis-à-vis its northern neighbour.  

In May 2014, when Narendra Modi became India’s Prime Minister, efficient governance, and not the type of governance, was the focal point of global debate.

Modi took the challenge. “Democracy can deliver,” he said. 

Performance-Oriented Democracy

Ten years down the line, Modi stands vindicated. India did deliver under his leadership. The attitude of global investors towards India has changed for the better.

Even Modi’s worst critics should agree that the pace of decision-making and implementation has reached an unprecedented high since Liberalisation in 1991. 

All of this is leading to high growth. According to the International Monetary Fund (IMF), India is set to contribute 16 per cent of global growth in 2023, and that’s no fluke. 

“What we have been observing for quite some time now is that India has been growing at a very robust rate. It's one of the star performers when it comes to real growth when you look at peer countries,” Nada Choueiri, the Mission of India at IMF was quoted as saying. 

Prasenjit K Basu pointed out that India’s inflation-adjusted real gross domestic product (GDP) grew by a record 8.1 per cent between April 2021 and September 2023. The previous high was 7.4 per cent during Modi’s first term as Prime Minister. 

Basu is a former Chief Economist for India and South East Asia at Credit Suisse First Boston. He had rightly kept the pandemic shock out of context and concluded that 7.5 per cent should henceforth be treated as the “new normal” growth average.

India's real GDP grew at 6.7 per cent between 1998-99 and 2018-19. The average increased to 7 per cent during 2004-05 and 2018-19. 

Successive Indian governments have been consistent in their effort to push the growth numbers up. However, external shocks apart, the slow pace of reforms and delays in project implementation limited growth potential in the past. Modi changed the pattern. 

The parliamentary majority which the Bharatiya Janata Party (BJP) achieved under Prime Minister Modi is a reason behind this stellar show, but not the only one.

The Vajpayee government left behind a solid balance sheet, marked by consecutive three years (2001-02 to 2003-04) of current account surpluses, but the Manmohan Singh regime (2004-20014) blew up the advantage.

According to Trading Economics, India’s current account deficit (CAD) peaked at 4.8 per cent in 2012 (calendar). The highest CAD of the Modi era was 2.6 per cent (2022). 

If Manmohan faced the global economic meltdown and Fukushima nuclear disaster, Modi faced the pandemic and the post-pandemic uncertainties. Never before the world was so uncertain as in the last four years, and it could remain so for another few years.  

New Politics

After the liberalisation of 1991, the then prime minister Narasimha Rao famously said that the days of ideological politics were over and that they should be replaced by politics of performance.

Modi is the first politician who realised what Rao envisioned. In the past, voters replaced a performance-driven Vajpayee government with a Congress-led coalition. 

Essentially, therefore, Modi introduced new standards in Indian politics. His was the first government that had been highly target-oriented. All governments put timelines for project competition, but the Modi government has been exceptional in achieving them. 

Taking toilets to every home has been a long-drawn agenda. The Modi government achieved it. Same with electricity and cooking gas connections. From abrogation of article 370 in Kashmir to promoting digital transaction — the unthinkable happened. 

The Opposition went after the failures, like the 2016 demonetisation. But that’s missing the woods for the trees. In the end, Modi stuck to his target. High-value (Rs 2,000) currency was withdrawn and digital payments became commonplace. 

This government did not ask people to wait for a lifetime to see benefits coming.

Voters experienced a rapid improvement in the nation’s highway and railway infrastructure. Logistics costs have reduced from 14 per cent of GDP to 8 per cent, which will boost future growth. 

Indian democracy is finally giving competition to China in quick delivery. However, there is one weakness in this story. While the BJP has changed under Modi, the Opposition is yet to get out of the old school thoughts. 

Some six bills were introduced in the Parliament in the recently concluded winter session. These included the high-profile Telecommunication Bill and the replacement of the century-old criminal and penal codes. 

This was a record for any government that was going to face an election only four months away. Clearly, Modi did not have time to waste. But the Opposition stuck to the formula of creating a ruckus and stalling parliamentary proceedings.  

In the end, over 140 MPs were expelled and bills were passed. The Congress pointed fingers at the BJP for the absence of debates, but was oblivious to the imperative of introspecting their own political approach. 

Until that happens, the BJP will gain out of the TINA (there-is-no-alternative) factor, but Indian democracy will lose the opportunity to improve upon its efficiency.