Column; Looking beyond the economic policy

Updated: May 25 2014, 03:12am hrs
Everyone realises that independent India has come to an historic moment. For the first time ever, a party that stands for Hindu nationalism has an absolute majority in Parliament. Where will the country go from here Every possible analogy from recent history has been used by various commentators, from Hitler to Thatcher. Let us put these facile comparisons aside, and see how India got where it is now, and use that to predict the future.

Looking at the election, there are four factors that influenced the outcome. The first three were initial conditions, namely the characteristics of the leader, the record of governance and the affinities of the voters. The first of these was immensely important: Narendra Modi was the only one who came across to voters as a strong, competent leader of the nation as a whole (with some concerns about the interpretation of the meaning of that wholeness). The record of governance was also important, particularly with respect to economic performance, but also honesty and general competence. Finally, newer or broader affinities of class and religion (perhaps extending to the god of GDP) carried more weight than older, narrower ones of caste and region. Looking at how these three factors have changed in shaping the election outcome, one can easily see that this was Indias first modern election, and things will never be the same.

Much attention has also been paid to the campaign process. Here, too, there was some change, in terms of sophistication of methods to woo voters and create the brand and the message. Surely marketing played a role in the strength of the BJPs performance. But this was possible only because of the nature of the three initial conditions. The successful campaign strategy was built on these fundamental factors. In a way, this was India Shining 2.0. The country did not quite get that message a decade ago. This time it was embraced, as a promise rather than an achievement (though Gujarat Shining was clearly used to establish the latter, though never put that way).

I am arguing that there is a fundamental change in the national ethos in terms of expectations of the governed with respect to those who govern. What does this imply for the future Clearly, there is a long way to go. The failure of the Aam Aadmi Party across the nation (except in

Punjab) illustrates some limits of the change. So, too, does the continued high proportion of elected legislators with criminal records, or with little real

education. But these conditions will likely change over the next two decades, if not sooner. The continued strong

influence of big business is also unchanged, though this influence has expressed itself in particularly distorted and inefficient ways under the Congress rule.

I think on the economic front, the future is relatively clear. Delivering on the promise of economic growth and jobs will require actions to create a more business-friendly environment, including more certainty, less red tape, more efficient taxation, and better market institutions. Some reforms have been continuing under the UPA, and it will be more a question of bringing those to fruition, rather than any radical new reform agenda. In other cases, removing roadblocks and policy paralysis should also be relatively easy. As I have argued before, 8% is a natural average growth rate for India now. On economic policy, it is also easy to see Modi as a CEO, making sure that key decisions get made in a timely manner. There will be no rapacious coalition partners to worry about, nor a reluctant, confused heir apparent waiting in the wings. Simply removing the incredibly dysfunctional internal politics of the previous government will give a significant boost to governance and growth.

The interesting questions for the future lie outside the economic sphere. How will the new government manage international affairs How will it manage the educational system, which provides skills, but also creates citizens What will its agenda be with respect to the legal basis of an array of minority group rights So, the key ministries to watch will not be finance or commerce, but external affairs, human resource development and home. These are the arenas where it will become clear whether the new government really wants to serve all its citizens. Note that these issues are always difficult. Europe created homogeneous national identities, often through violence, before embarking on programmes of economic development, and claims of liberal humanism are being tested as those nations become more diverse. Independent India has perhaps stood out in its avowal of pluralism (though always under strain in practice), despite the absence of widespread material prosperity.

Narendra Modi said the right thing when he said, This new government is for the poor people, for the youth, for the mothers and women and Dalits. He could have added religious and ethnic minorities to that list, but perhaps could not go that far because of some of his followers. The question will be if he can live up to this statement, and bring along the rest of his party on that path.

Nirvikar Singh

The author is Professor of Economics, University of California, Santa Cruz