India’s Aspirations

Reshaping the World's Biggest Democracy

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India’s democracy, the world’s most populous, is a marvel of the modern age: 1.2 billion people who speak more than 700 languages uniting under one roof. Its enormity also slows the decision-making needed to keep up with its people’s aspirations. Feeble public services, surging inflation, crippling corruption and crumbling infrastructure are ever-present grievances of an increasingly fed-up population, most of whom live on less than $2 per day. Indians yearn for better education, more jobs and faster development as a path to prosperity. Prime Minister Narendra Modi was swept to power in May offering a change of course. His plan to reinvigorate the economy offers a test of India’s maturing democracy, one that may alter its strong secular and socialist traditions.

The Situation

After Modi’s party won the nation’s first parliamentary majority in 30 years, he pushed to ease regulations related to land, labor, taxes, subsidies and foreign investment. He also started a Make in India campaign to revive manufacturing and implemented more market-based energy pricing. The moves won praise around the world and pushed Indian stocks to a record high, with the benchmark index among the world’s top performers in 2014. After more than a decade in office, the rival Congress Party suffered its worst-ever performance in the May election amid allegations of graft and economic mismanagement. Modi’s grip on power makes it easier for him to drive through measures to help cool inflation and restore economic growth, still stuck at its slowest pace in about a decade. His Bharatiya Janata Party remains focused on a pro-Hindu agenda that threatens to reignite religious tensions. Parts of the population will never forgive Modi for his handling of riots in 2002 that killed 1,000 people, mostly Muslims, in the western state of Gujarat, where the 64-year-old ruled as chief minister for 13 years.

Source: India Central Statistical Office
Source: India Central Statistical Office

The Background

Jolted by a balance-of-payments crisis caused by four decades of Soviet-style economic planning, India changed course in 1991 to embrace foreign investment and set the stage for an economic boom. The Congress-led government and its Nehru-Gandhi dynasty redistributed the wealth, expanding subsidies for the poor fivefold over the last decade. The spending provided subsidized food, free education and even guaranteed work in rural areas, where about 70 percent of the population lives. The share of people living below India’s official poverty line was cut by more than half to 22 percent. Per-capita income rose to $1,240 in 2013 from about $250 in 1992, though that success still pales in comparison to China’s. Modi’s BJP consolidated the Hindu vote in the 1990s and led the government from 1998 to 2004, when it pursued a partial privatization of state companies. Tensions between Hindus and Muslims have played a defining role in politics since Britain divided the subcontinent into India and Pakistan. Hindus make up about 80 percent of the population, while 13 percent are Muslim.

Source: Government of India Planning Commission
Source: Government of India Planning Commission

The Argument

India’s democracy has traditionally divided spoils along the lines of religion and caste. As aspirations of an expanding urban population rise, the divisions are now more about ideas: how to power faster development, the appropriate role and size of the state, how to weed out corruption and new ways to deliver public services. Modi’s supporters see him as a leader who can transform India by shifting toward a more market-based economy and empowering those at the bottom of the country’s ancient caste system. His critics doubt that he’ll take measures that increase competition for India’s tycoons or move against religious factions of his party, which oppose opening the economy to foreign companies and want to erode the country’s secular foundations.

The Reference Shelf

First Published April 2, 2014

To contact the writer of this QuickTake:

Daniel Ten Kate in New Delhi at dtenkate@bloomberg.net

To contact the editor responsible for this QuickTake:

Leah Harrison Singer at lharrison@bloomberg.net