The Hamilton Spectator

India Advances, Amid Inequality


NEW DELHI — As Narendra Modi was storming to victory in the election of 2014, he said that “acchhe din aane waale hain” — good times are coming.

Now as Mr. Modi stands set to secure another term as prime minister in elections starting on April 19, the value of India’s stock market has grown threefold since he took office. India’s economy is almost twice as big as it was.

Stocks have risen so much because the number of Indians with enough wealth and appetite for investment risk has jumped — to nearly 5 percent of the population from barely 2 percent.

But the economic gains have been widely unequal. The bulk of India’s growth depends on those at the top of the income ladder, including a coterie of huge and tightly controlled businesses.

Ninety percent of India’s population of 1.4 billion is estimated to subsist on less than $3,500 a year. Yet in the poorest rural districts, life has been made more bearable by welfare programs that have expanded under Mr. Modi. Many of the benefits are solid and visible: sacks of free grain, toilets, gas cylinders and housing materials. LED lights, cheap smartphone­s and nearly free mobile data have changed the nature of idle time.

Internatio­nal surveys show India’s consumers have become the most upbeat anywhere.

Foreigners are also feeling good about the Modi economy. Banks like JPMorgan Chase are upgrading India’s weighting in their global stock and bond indexes.

Still, India’s rates of growth over the past 10 years have been very similar to those of the decade that preceded it, under a government that Mr. Modi often blames for wrecking the country.

The Indian success story is also an attribute of what could be the singular characteri­stic of Mr. Modi’s tenure: his ability to control all levers of power, with showmanshi­p as the first priority.

While official statistics anticipate growth of 7.3 percent in the current fiscal year, finance experts in Mumbai put the figure at 6 to 6.5 percent. The lowest estimate touches 4.5 percent, which would still beat the United States and possibly China.

Expressing even mild skepticism is avoided. Economists who depend on government work must be careful not to speak frankly. Economists who do not work with the government are becoming scarce, as independen­t think tanks are raided and shuttered. Message control is more pronounced than it was under Mr. Modi’s predecesso­r, the award-winning economist Manmohan Singh. India became known as a “flailing state” under Mr. Singh, even with growth sometimes hitting 10 percent.

Now political competitio­n has been all but eliminated at the national level, and Mr. Modi has exploited animosity against the country’s Muslim minority of 200 million.

He has also used state power to make things happen. Infrastruc­ture is on a tear. Welfare programs have become more responsive.

India has made a digital leap. The push began during Mr. Singh’s tenure, but Mr. Modi has run with it. The “India Stack,” a suite of software platforms that runs on the base of Aadhaar, a biometric identifica­tion system, means that Indians now have access to faster and cheaper peer-to-peer transactio­ns than Americans.

Taxes have been overhauled. India has driven more of the economy into the formal sector, for instance by enacting a Goods and Services Tax like Europe’s value-added tax, allowing more revenue to be extracted from more people and businesses. That has freed up money for public spending and, by lowering corporate tax rates, private financing.

But the Indian government’s power to act decisively and usually without check has created distortion­s and inequaliti­es. The biggest companies have profited wildly. Of the $1.4 trillion in wealth created by the most prestigiou­s stock index from 2012 to 2022, 80 percent went to 20 companies, Marcellus Investment Managers in Mumbai estimated in 2022.

The most painful aspect of the economy is the jobs situation. Officially about 7 percent of Indians are unemployed. Vastly more are underemplo­yed.

The bureaucrac­y still impedes businesses without connection­s to the top of government. But now, projects that used to require two years of permission-seeking can be completed in 15 days.

Along with the acchhe din he promised in 2014, Mr. Modi pledged “minimum government, maximum governance.” In practice, his economic approach has not been defined by theory or ideology. He has thrown everything against the wall to see what sticks. He has thrown persistent­ly, and with force. When economists talk about India, they have stopped talking about the “flailing state.”

 ?? MAHESH KUMAR A./ASSOCIATED PRESS ?? Prime Minister Narendra Modi of India is seeking reelection this month. A recent rally.
MAHESH KUMAR A./ASSOCIATED PRESS Prime Minister Narendra Modi of India is seeking reelection this month. A recent rally.

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