Everyone loves a political dogfight. So, it is no surprise that Rahul Gandhi’s holding-no-punches comeback to frontline politics has attracted much attention. A constant battle between Prime Minister Narendra Modi and the presumptive leader of the leading opposition party will quite obviously be a feature of politics, at least until 2019. But what is more important than the clash of two contrasting personalities is the battle of ideas that could define where India ends up two decades from now. India’s raucous political economy is nowhere near a consensus on the policy path ahead.
It would be easy to conclude that Mr. Modi has the better grasp of what India wants. After all, he won the first single party majority in three decades just a year ago, something many political scientists thought a fractured Indian polity had abandoned for good. But the reality is that the mandate was probably more a vote against corruption and inflation, the two evils promoted by the Congress-led United Progressive Alliance government, than a conclusive vote for a more positive agenda. Mr. Modi’s vision is clear. For prosperity, he believes Indian needs to industrialise — that’s what ‘Make in India’ is about. That is the only way to draw people out of agriculture and make that sector more productive. To better the lives of Indians, he knows India needs to urbanise in a more orderly fashion than before — that is what the >100 ‘smart cities’ are about. He knows that prosperity requires the generation of wealth by the private sector — that is why he has committed to building infrastructure and easing the constraints of doing business. He also knows the poor can’t be left behind, but instead of wasteful subsidies and doles he wants to include them in the mainstream through innovative schemes like the >Jan Dhan Yojana , the Rashtriya Swasthya Bima Yojana and through direct cash transfers.
Converting vision into reality
Mr. Modi’s is a textbook vision. No country has become rich without developing a manufacturing base and without shrinking the workforce involved in agriculture; without vibrant cities and without a majority of the population living in them; and without a wealth-generating private sector. Mr. Modi should have the argument wrapped up but he doesn’t. A major part of his problem is that people are not seeing the conversion of that vision into reality quickly enough; another is that his government hasn’t created the right policy frameworks for that vision to be executed. India’s laws and regulations remain more suited to an old-fashioned socialist economy than a modern market economy. If he is to persuade India, Mr. Modi needs to be radical in policy reform and sprightly in execution; he needs to show change in the next four years.
Meanwhile, Mr. Gandhi is going to try and tell India that Mr. Modi is on the wrong track. At the centre of his argument is the fact that Mr. Modi’s strategy will do little for India’s poor and only favour the rich. That argument will always have some appeal in a country where some 300 million people still live in absolute poverty. However, if Mr. Gandhi thinks he can win the argument by promising a rural idyll, where 50 per cent of India’s workforce will continue to plough farms producing less than 15 per cent of GDP, he is wrong. He needs to define a plan for prosperity because India’s poor don’t want to remain mired in poverty. They aren’t reflexively against wealth creators either, as long as they see that those wealth creators are also generating jobs for the average Indian. Sure, Mr. Gandhi should rail against crony capitalism but not miss the wood for the trees. India needs a vibrant, competitive private sector to generate jobs. Mr. Gandhi must have a vision of his own to show how this can be done, which could be different from Mr. Modi’s. It could involve greater state intervention, better regulation and a more transparent government. But he will have to be particularly persuasive to sell his party to India given its horrendous recent record in government.
Of course, if Mr. Modi fails to deliver his vision of India, Mr. Gandhi may find a way back by default. But that won’t serve India’s interests. With a limited pro-poverty rather than pro-poor agenda, Mr. Gandhi can never be a change agent. If ever he comes to power on that kind of agenda, failure is guaranteed, just like it was for UPA-II.
Any process of reform and churning — and India will continuously go through both in one way or another in the next decade and longer — creates winners and losers. The best politicians deftly manage both sides. With Mr. Modi, there is a risk (at least of perception) that he will side disproportionately with the winners. With Mr. Gandhi, there is a risk that he will undermine the winners and empathise (via paltry doles) with the losers. Neither is a sustainable political economy. Both scenarios will lead to a backlash from one group or another. Whichever man finds the better balance and efficient execution will govern India for the longer time. He will also convert India from a poor nation to a rich one.
(Dhiraj Nayyar is an economist and columnist.)
