It is the rush hour. The first votes are yet to be cast. Victory though, it would seem, is a mere formality. Bankers and investors on Wall Street and Dalal Street are voting with dollars and rupees. The Sensex is defying gravity, sentiment is challenging logic. Investment banks are in a race of competitive adulation. The rupee, boosted by testosterone therapy, is reflecting a new machismo. The wail of pessimism is fading off, the NaMo wave of exuberance—rationality is after all about where you stand—is setting in.
John Maynard Keynes used the metaphor of a beauty contest most eloquently to explain the role of expectations. And this—for many—is a beauty contest with just one contestant, and that is Narendra Modi. In this battle of who is the problem for what, where insinuations are wrestling innuendos, Modi has positioned himself as the solution. This is a contest between atheists and sceptics to proselytise agnostics and the Modi juggernaut is being propelled by devotees and devotion.
Such has been the breakdown of leadership and therefore the collapse of order in the past few years that the polity has individualised what is institutional—both in its diagnosis and prescription. The burden of expectations, therefore, is imaginably tremendous. When Modi takes over—and there is a lingering iffiness—he would be challenged by both expectations and circumstance.
Consider the political circumstance. The debate over the definition of what constitutes a ‘Modi wave’ will be endless, but there is no disputing the force and momentum—from 116 seats in 2009, the potency of the BJP is placed at around 200, nearly two times its current base. It’s not yet home, however. Unless the wave metamorphoses into a tsunami that takes the coalition past the 250 mark, the ‘Modi Sarkar’ would require props. The BJP will have to source it from the derivatives market of Indian politics which accounts for about 200 seats in the house of 543. This will entail a price—the political versions of subscription, maintenance fees, dividends, ESOPs, insurance etc. Delay or denial in political rent and benefits will result in number portability—which Atal Bihari Vajpayee experienced in 1998.
This reality prompts the question: Can Modi be Modi? Will politics permit NaMonomics?
The viability of the idea of NaMonomics, for instance, demands focus on delivering growth through public and private investment. Simply, the economy needs more pebbles to be dropped in the pot for the water level to rise. Between 2004 and 2014, India has been reduced from a low-cost, high-growth economy to a high-cost, low-growth economy. Growth is constrained by poor finance management. This year, the government is estimated to borrow Rs 65 crore every hour, every day. Add around Rs1.5 lakh crore for fuel and food subsidies not provided for. Then there is the crisis in the banking sector—or what the RBI describes as risk of “increased vulnerabilities” in its stability report. Officially, bad loans are around Rs 2 lakh crore—private estimates are to the tune of Rs 3.5 lakh core. Much of this is located in stalled decisions on permissions and linkages in projects worth Rs 12 lakh crore stuck in the pipeline.
Creating fiscal headroom—that is funds for growth—would require cutting of expenditure, raising of taxes, cutting of subsidies and exemptions and raising resources through privatisation. Cutting expenditure or raising taxes is a bad idea when GDP growth is 4.5 per cent. Slashing subsidies will be politically unpalatable even within his party. Imagine negotiating this with a Mamata, Jayalalithaa or Mayawati. Induction of technology—cash transfers—would help cutting subsidy burden, but the party is yet to articulate its view. And privatisation of PSUs, which are losing Rs 3 crore every hour—seems off the table. This is not to say that the problems are intractable or that solutions are unavailable, but given the arithmetic of politics deliverance, it is a long haul.
India is facing a profound political crisis, ergo the economic slowdown. The scaffolding of reason that holds the structure of power and order is frayed and crumbling. The principal problems of poverty, growth and corruption are all located in the process of decision-making. The expansion of entitlement for a few—both politicians and voters—has led to institutional disempowerment. The solutions—decentralisation and dismantling of the nanny state—are stranded in the corridors of political navigation and negotiation of rent.
Tragically these issues that matter are off the campaign menu. The voter is well informed on what the parties are against. It is as if the political parties expect electors to vote on what they don’t want. Modern India wants governance and demands wider and deeper transparency in decision-making. Politics, by definition, must be about solutions.
The reigning cliché is that India is in a coalition era. This is so because India’s political discourse is detained in the 1950s. Unless this status quo is challenged—and it is both an imperative and opportunity for Modi—India will continue to hibernate in the coalition… rather, the compromise era.
Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change
Shankkar.aiyar@gmail.com