Column: Modi has to lift India on to a new level

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Updated: November 23, 2015 9:24:30 AM

With Modi, India has a chance to get back to the basics of building prosperity by changing policy

Prime Minister Narendra ModiPrime Minister Narendra Modi (Reuters photo)

The day Prime Minister Narendra Modi addressed members of both Houses of the UK Parliament in the Royal Gallery was also the 85th anniversary of the day the King-Emperor George V opened the the Round Table Conference on India. That was the first time the Emperor sat on the same level as his subjects. The Modi visit was also the first time an Indian Prime Minister had been received on an equal footing, not just out of diplomatic compulsion, but raw economic interests of the host nation. The UK government was bending over backwards to make Modi—and through him, India—feel valued and wanted.

It would not have come without the growth trajectory of the previous 25 years. The Guardian snootily remarked that Modi somehow did not care about the British and kept his visit almost the last of his 29 trips abroad because, unlike previous Prime Ministers, he had not been to Oxbridge. Charming as usual, but also wrong. Of the 15 Prime Ministers of India, only four went to Oxbridge. Of the four, two never passed any examination, and one successfully, but not spectacularly, passed his Natural Science Tripos. He kept India in the Commonwealth. The fourth came out with brilliant degrees from both Cambridge and Oxford. Manmohan Singh, the clever scholar, brought glory to India by launching a reform programme which let the economy achieve its full potential after 40-plus years of underachievement. (Till then, the episode of Indian socialism that had played out had brought the economy to bankruptcy and had to be abandoned.)

India is now a prize economy as far as the world is concerned. The world wants to do business with India, to get access to its markets, to invest capital in India and to attract Indian capital to their lands. India is the fastest-growing economy and the tallest among the BRIC countries. India does not have high technology to sell to UK as China does. It does have rare managerial skills as the Tatas demonstrated with Jaguar and Land Rover. India also has a growing market, with 800 million under the age of 35 and nearly a billion mobile phones.

This has happened, thanks to 25 years of consensual reform that has delivered sustained growth. India lost its fear of foreign trade and foreign capital and began to trust its own private sector not to be just rapacious, but efficient and profitable. It began to trust its people to make good choices for their children’s education. There are still many xenophobic institutions, especially the trade unions of parties of the Left and the Right, as we see from their visceral dislike of FDI liberalisation announced by the government after the Bihar elections. In the party political arena, no one has a kind word to say about modern business or a government which harnesses private business to provide jobs and good incomes. The taunt ‘suit-boot ki sarkar’ harkens back to the glory days of abysmal per capita income growth and poverty statistics which marked India as a basket-case.

That remains the puzzle about prime minister Modi. While the UK government was eager, the ordinary UK citizen hardly noticed. What caught the media attention was the protest by some Indians in the UK and at home. Even so, it helped Modi by compelling the press and TV to give much more coverage than was given to president Sisi of Egypt. As to the reaction to president Xi of China, the government fawned, but the public felt humiliated by the behaviour of its government. With Modi, the media noticed the diaspora debate and gave Modi publicity.
For Modi, these trips abroad are a way of getting to know his G-20 partners on a one-to-one basis. His approach to economic diplomacy is personal and almost tactile. As a man who has come to the top entirely on his own strength and without family or patronage advantages, he does a lot himself which others would trust to their courtiers. You could see that in his interaction with David Cameron.

The British have decided that for them to stay prosperous they have to trade aggressively with wherever the markets are. They have to diversify away from the EU which is a stagnant region and turn their attention to such emerging economies which have the capital and the markets to profit the British economy. It is blatant, and often cynical, as the response to president Xi showed. But the UK is proud to be a nation of shopkeepers, since it knows that jobs and prosperity come from trade. The Brahmins in charge of India for the first 40 years had a disdain for trade and commerce. They were replaced, but not sufficiently. With Modi, India has a chance to get back to the basics of building prosperity by changing policy, but even more important, leading the mindset away from the abstract and towards the concrete concerns of securing growth. He has to lift India on to a new level, both materially and psychologically.

The author is a prominent economist and Labour peer

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