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Nation can hope to reap big benefits for at least trying to implement the Gujarat model of pro-business pragmatism and limited government
By William Pesek
Should the US be taking economic lessons from India? Former House speaker Newt Gingrich thinks so. Perhaps not from India as a whole, but at least from the booming western state of Gujarat, which has enjoyed 10 per cent-plus growth under its controversial Chief Minister, Narendra Modi. “If we had Gujarat’s growth rates over the last 10 years,” Gingrich told Modi in a recent Skype video conversation, “we would have been a lot healthier country than we are right now.”
While the “Gujarat model” has about as much chance of gaining traction in Washington as Gingrich does, its prospects look brighter at home. Modi has just become the main opposition Bharatiya Janata Party’s (BJP) pick to lead its 2014 election campaign. With the popularity of Sonia Gandhi’s ruling Congress party evaporating fast, the BJP leader may soon be in a position to apply his “model” nationally.
Will he succeed? Can Gujarat’s mix of pro-business pragmatism, limited government, hefty foreign direct investment and anti-graft efforts be expanded to the whole country? The task will be Herculean and pitfalls abound. Yet, India will reap big benefits for trying.[/B] The mere mention of Modi’s name raises blood pressure. Muslims seethe over his failure to stop riots that targeted their community in Gujarat in 2002, leaving more than 1,000 people dead and Modi barred from the US. Many see his governing style as autocratic, divisive and ill-suited to running a complex and cacophonous country.
Yet, let us separate the villain from the ideas. Modi harnessed his state’s innovative spirit and did not get in the way — both lessons the current government can stand to learn. Modi’s life story — he is the son of a train-platform tea seller — resonates with a populace fed up with dynastic politics. (Sonia’s diffident son, Rahul, is expected to be the Congress standard-bearer in next year’s elections.) But what has really turned the Gujarat chief into a hero of the swelling middle class is his Margaret Thatcher-esque principle, “minimum government, maximum governance”.
The current Congress Prime Minister, Manmohan Singh, has been a surprising failure. As finance minister in the early 1990s, he opened India’s economy to the outside world. Investors hoped Singh would use a sizable re-election mandate in 2009 to get back to his roots and remove barriers to trade, investment and job creation. Instead, a series of huge scandals involving everything from mobile-phone licences to coal assets have hobbled Singh’s administration. New Delhi is gridlocked amid the slowest growth in a decade — just 4.8 per cent.
Gujarat’s resilience stands in stark contrast. Over the last decade, Gujarat grew 10 per cent compared with 7.8 per cent for the national economy. Under Modi, Gujarat did four things that the nation, as a whole, can and should emulate.
First, the administration has continued to slash away at India’s “licence raj”, the labyrinthine system of issuing permits that hampers business and breeds corruption. Second, officials revitalised industries from agriculture to manufacturing by improving irrigation, supporting small-share farmers and attracting new factories of companies including General Motors and Hitachi. Third, the state more than quintupled power-generation capacity by investing in more efficient grids and building Asia’s largest solar field. Fourth, Modi successfully lobbied for business and infrastructure investment.
“Translating Mr Modi’s success in Gujarat to the national level will be difficult as the bureaucratic impediments and opposition from powerful vested interests will be several times greater than at the state level,” says economist Eswar Prasad of the Brookings Institution in Washington. “Nevertheless, a leader with a clear vision, strong political will and broad political support is capable of effecting change.”
That last point is key. Even if India stands to benefit from Gujarat-style reforms, that does not necessarily mean Modi is the best man to implement them. In fact, given how distracting his personal controversies are likely to be, he could be the worst. Part of Modi’s popularity goes back to a long-running desire among middle-class Indians for a strong hand at the tiller — a Chinese-style autocrat who can break the grip of dithering politicians. No, Indians do not want to live under an oppressive regime that jails dissenters and muzzles the media. But a system like India’s that cannot deliver and represses the economy is not much fun, either.
The problem is that India’s thriving democracy features several potent and independent-minded regional leaders with national ambitions — a multiplicity of Modis. Its constitution contains strong elements of federalism. It is very hard even for a popular and charismatic leader to ram proposals down the throats of reluctant states and Modi is no one’s idea of a consensus builder. If US President Barack Obama thinks it is hard to enact change, a domineering and unrepentant Modi can well find it impossible.
India needs Modi’s ideas more than it needs Modi himself. Indians should not let the clouds that linger over Modi blind them to the dire need for change.
India should separate Modi from the message | GulfNews.com
By William Pesek
Should the US be taking economic lessons from India? Former House speaker Newt Gingrich thinks so. Perhaps not from India as a whole, but at least from the booming western state of Gujarat, which has enjoyed 10 per cent-plus growth under its controversial Chief Minister, Narendra Modi. “If we had Gujarat’s growth rates over the last 10 years,” Gingrich told Modi in a recent Skype video conversation, “we would have been a lot healthier country than we are right now.”
While the “Gujarat model” has about as much chance of gaining traction in Washington as Gingrich does, its prospects look brighter at home. Modi has just become the main opposition Bharatiya Janata Party’s (BJP) pick to lead its 2014 election campaign. With the popularity of Sonia Gandhi’s ruling Congress party evaporating fast, the BJP leader may soon be in a position to apply his “model” nationally.
Will he succeed? Can Gujarat’s mix of pro-business pragmatism, limited government, hefty foreign direct investment and anti-graft efforts be expanded to the whole country? The task will be Herculean and pitfalls abound. Yet, India will reap big benefits for trying.[/B] The mere mention of Modi’s name raises blood pressure. Muslims seethe over his failure to stop riots that targeted their community in Gujarat in 2002, leaving more than 1,000 people dead and Modi barred from the US. Many see his governing style as autocratic, divisive and ill-suited to running a complex and cacophonous country.
Yet, let us separate the villain from the ideas. Modi harnessed his state’s innovative spirit and did not get in the way — both lessons the current government can stand to learn. Modi’s life story — he is the son of a train-platform tea seller — resonates with a populace fed up with dynastic politics. (Sonia’s diffident son, Rahul, is expected to be the Congress standard-bearer in next year’s elections.) But what has really turned the Gujarat chief into a hero of the swelling middle class is his Margaret Thatcher-esque principle, “minimum government, maximum governance”.
The current Congress Prime Minister, Manmohan Singh, has been a surprising failure. As finance minister in the early 1990s, he opened India’s economy to the outside world. Investors hoped Singh would use a sizable re-election mandate in 2009 to get back to his roots and remove barriers to trade, investment and job creation. Instead, a series of huge scandals involving everything from mobile-phone licences to coal assets have hobbled Singh’s administration. New Delhi is gridlocked amid the slowest growth in a decade — just 4.8 per cent.
Gujarat’s resilience stands in stark contrast. Over the last decade, Gujarat grew 10 per cent compared with 7.8 per cent for the national economy. Under Modi, Gujarat did four things that the nation, as a whole, can and should emulate.
First, the administration has continued to slash away at India’s “licence raj”, the labyrinthine system of issuing permits that hampers business and breeds corruption. Second, officials revitalised industries from agriculture to manufacturing by improving irrigation, supporting small-share farmers and attracting new factories of companies including General Motors and Hitachi. Third, the state more than quintupled power-generation capacity by investing in more efficient grids and building Asia’s largest solar field. Fourth, Modi successfully lobbied for business and infrastructure investment.
“Translating Mr Modi’s success in Gujarat to the national level will be difficult as the bureaucratic impediments and opposition from powerful vested interests will be several times greater than at the state level,” says economist Eswar Prasad of the Brookings Institution in Washington. “Nevertheless, a leader with a clear vision, strong political will and broad political support is capable of effecting change.”
That last point is key. Even if India stands to benefit from Gujarat-style reforms, that does not necessarily mean Modi is the best man to implement them. In fact, given how distracting his personal controversies are likely to be, he could be the worst. Part of Modi’s popularity goes back to a long-running desire among middle-class Indians for a strong hand at the tiller — a Chinese-style autocrat who can break the grip of dithering politicians. No, Indians do not want to live under an oppressive regime that jails dissenters and muzzles the media. But a system like India’s that cannot deliver and represses the economy is not much fun, either.
The problem is that India’s thriving democracy features several potent and independent-minded regional leaders with national ambitions — a multiplicity of Modis. Its constitution contains strong elements of federalism. It is very hard even for a popular and charismatic leader to ram proposals down the throats of reluctant states and Modi is no one’s idea of a consensus builder. If US President Barack Obama thinks it is hard to enact change, a domineering and unrepentant Modi can well find it impossible.
India needs Modi’s ideas more than it needs Modi himself. Indians should not let the clouds that linger over Modi blind them to the dire need for change.
India should separate Modi from the message | GulfNews.com
