India’s transformation

Domestic political strife threatens to impede India’s rapid ascent

The stunning economic transformation of India over the past three decades is one of the most important and underappreciated implications of the end of the Cold War. For 44 years after its independence from Britain, India functioned as a command-style economy.

Forced by a severe balance of payments crisis to turn to international financial institutions for assistance, the country embarked upon a path of economic liberalization in 1991. Over the next two decades, economic growth doubled to well over 6 percent per year, and the share of Indians living below the poverty line dropped from nearly half in the early 1990s to 34 percent in 2010.

India’s rise as a global geoeconomic player is the driving factor behind its emerging strategic alignment with the United States. After China, India has been the fastest growing economy for about two decades. It went from being the 11th largest economy in 2012 to the fifth largest in 2022. Last year, it overtook China as the most populous nation on the planet. Washington hopes to leverage India’s economic growth to manage the challenge it faces from a more assertive China.

However, domestic political strife threatens to impede India’s ascent. In parallel with its massive economic reforms and growth, India’s politics have transformed over the past 30 years. From independence until the 1990s, the country’s main secular left-of-center party, the Indian National Congress, faced no major challengers at the national level.

For much of India’s history, it was firmly under the control of the Nehru-Gandhi dynasty, which provided three generations of Indian prime ministers. But severe economic problems, coupled with a leadership crisis in the wake of two major assassinations (Prime Minister Indira Gandhi in 1984 and former Prime Minister Rajiv Gandhi in 1992), weakened the hold of the party.

Around the same time, right-wing Hindu nationalism emerged as a significant social and political force, represented by the new Bharatiya Janata Party. Founded in 1980, the BJP went from two seats in Parliament in the 1984 elections to well over 150 when it formed its first government 12 years later.

Although the Congress party played a key role in the liberalization of the economy in the 1990s and during its two stints in power from 2004 to 2014, the political culture of the country had significantly changed by the early 2010s, with religious nationalism having replaced secularism as the dominant national ideology.

Under the leadership of current Prime Minister Narendra Modi, the BJP made a roaring comeback in the 2014 elections, more than doubling its parliamentary seats. Paradoxically, however, Modi’s India has experienced faster economic growth combined with intensifying right-wing Hindu nationalism. The latter threatens to undermine the stability of the country.

Elections are slated for the spring, and the ruling BJP is expected to at least retain its majority, giving Modi a third term as chief executive. India’s economy will likely continue to surge ahead as it benefits from the diversion of Western investment away from China.

And barring any unforeseen developments, Modi will probably continue to balance the economic imperatives of the state with the growth of a new Indian identity centered on the majority Hindu religion, which is key to his political success. However, over the medium to long term, the rise of Hindu nationalism could corrode the secular foundations of the state, destabilizing it in the process.

On the foreign policy front, India’s role in the international security space will continue to increase. For much of India’s history, the military was tied down in South Asia by its regional rival Pakistan, but the weakening of the Pakistani state, especially in the past five years, has enabled India to look beyond the region. This trend will continue to enable India to focus on building its capabilities to deal with China on land and at sea.

Being a key partner of the United States in the IndoPacific region places India in the middle of the U.S.-China struggle. If Washington and Beijing are unable to reach an accommodation in the coming year, then we can expect increased conflict between the Chinese and the Indians.

Meanwhile, violence in the Middle East has undermined the security of shipping in the northwestern Indian Ocean basin, forcing New Delhi to take a greater role in the region’s maritime security. This, in addition to tensions along their shared Himalayan border, could become a point of friction between the Indians and the Chinese.

Kamran Bokhari, PhD is the Senior Director, Eurasian Security & Prosperity Portfolio at the New Lines Institute for Strategy & Policy in Washington, DC. www.geopoliticalfutures.com