Modi’s legacy may be instability and stagnation
India has projected itself for three decades as a bright spot in a tough neighborhood. But 2019 may turn out to be the year it became a trouble spot, depending on the answers to two questions.
First, can Prime Minister Narendra Modi’s Hindu nationalist government preserve India’s pluralistic democracy, or will an urge to settle scores with Muslims produce prolonged strife? Second, can the Indian economy return to the high-growth path many observers had begun to take for granted? In September annualized growth declined for its sixth straight quarter, to 4.5%, down from 7% a year earlier. This is India’s slowest growth since 2013, the year before Mr. Modi’s government was elected.
Under Mr. Modi, India has staked a claim as a “leading power” on the world stage. Its population of 1.3 billion is second only to China. The International Monetary Fund ranks India’s $2.9 trillion economy as the world’s fifth-largest, behind Germany and ahead of the U.K.
Since India began its transition to a market economy in 1991, optimists have likened it to China. Both are vast markets. Their per capita incomes were roughly comparable in 1990. India’s low base and youth bulge—more than 600 million people under 25—allow for rapid growth, in theory, long after an aging China slows. Democracy gives India the kind of deep-rooted stability that one-party China lacks. To smaller Asian nations, India’s success sends a powerful message: You don’t need to choose between prosperity and liberty.
These arguments, embraced by many in Western boardrooms and governments, have spread because they contain an element of truth. But the economic slowdown, coupled with the rise of an aggressive strain of Hindu nationalism, raises another prospect. Instead of becoming a counterweight to China and an engine of global economic growth, India may be headed toward internal instability and economic stagnation.
Since the passage earlier this month of a controversial law that for the first time creates a religious test for citizenship, tens of thousands of students, secularists and Muslims have taken to the streets in protest. Security forces have killed 25 people, including at least 15 Muslims in one state, Uttar Pradesh. The federal government has sent troops to the troubled northeast to quell local resentment toward Bengali-speaking migrants, Hindu and Muslim alike.
Mr. Modi has sought to reassure India’s 172 million Muslims that the citizenship law—which speeds up naturalization for non-Muslim refugees from Pakistan, Afghanistan and Bangladesh—has no bearing on their status. The prime minister has also sought to decouple the law from a proposed national database that would list all Indian citizens.
Critics warn that combined with the citizenship law the database would allow the government to disenfranchise Muslims by raising doubts about their documentation. Followers of other faiths would still qualify for citizenship. A similar process is under way in Assam, where Muslims deemed illegal migrants may be herded into detention camps.
A different government might have been able to calm these fears. But though Mr. Modi speaks of taking all Indians along the path of development, his record in office has only heightened worries that India will abandon its commitment to religious pluralism. Mr. Modi and Home Minister Amit Shah have empowered party hardliners accused of violence against Muslims. The bloodbath in Uttar Pradesh is no coincidence. That state is led by Yogi Adityanath, a militant Hindu monk known for his violent rhetoric and for setting up a private anti-Muslim militia.
In August, the Modi government scrapped autonomy for India’s only Muslim-majority state, Jammu and Kashmir, and bifurcated it into two federally administered territories. Authorities have arrested thousands of people—including three of the state’s former chief ministers. Earlier this month, the government’s ongoing ban on mobile internet in the Kashmir Valley set a dubious record—130 days, the longest ever internet shutdown in a democracy.
Meanwhile, the economy continues to sputter. In May, Labor Ministry data showed unemployment in 2017-18 at a 45-year high of 6.1%. Harvard’s Arvind Subramanian reckons that a new method of calculating gross domestic product overestimated economic growth by as much as 2.5 percentage points a year between 2011 and 2017.
In a new paper, Mr. Subramanian and former IMF India representative Josh Felman argue that India is in the midst of a “great slowdown” marked by weak balance sheets in banks, infrastructure companies, nonbanking finance companies and real estate. In November, New Delhi abruptly pulled out of the Regional Comprehensive Economic Partnership, a trade deal that would have integrated India’s economy more closely with East Asia.
Many supporters of the government pooh-pooh concerns about India’s prospects and expect a golden Hindu dawn. But unless Messrs. Modi and Shah can unite a deeply divided society and invigorate a languishing economy, India’s Hindu nationalist strongmen may instead be leading their country off a cliff.
India has projected itself for three decades as a bright spot in a tough neighborhood. But 2019 may turn out to be the year it became a trouble spot, depending on the answers to two questions.
First, can Prime Minister Narendra Modi’s Hindu nationalist government preserve India’s pluralistic democracy, or will an urge to settle scores with Muslims produce prolonged strife? Second, can the Indian economy return to the high-growth path many observers had begun to take for granted? In September annualized growth declined for its sixth straight quarter, to 4.5%, down from 7% a year earlier. This is India’s slowest growth since 2013, the year before Mr. Modi’s government was elected.
Under Mr. Modi, India has staked a claim as a “leading power” on the world stage. Its population of 1.3 billion is second only to China. The International Monetary Fund ranks India’s $2.9 trillion economy as the world’s fifth-largest, behind Germany and ahead of the U.K.
Since India began its transition to a market economy in 1991, optimists have likened it to China. Both are vast markets. Their per capita incomes were roughly comparable in 1990. India’s low base and youth bulge—more than 600 million people under 25—allow for rapid growth, in theory, long after an aging China slows. Democracy gives India the kind of deep-rooted stability that one-party China lacks. To smaller Asian nations, India’s success sends a powerful message: You don’t need to choose between prosperity and liberty.
These arguments, embraced by many in Western boardrooms and governments, have spread because they contain an element of truth. But the economic slowdown, coupled with the rise of an aggressive strain of Hindu nationalism, raises another prospect. Instead of becoming a counterweight to China and an engine of global economic growth, India may be headed toward internal instability and economic stagnation.
Since the passage earlier this month of a controversial law that for the first time creates a religious test for citizenship, tens of thousands of students, secularists and Muslims have taken to the streets in protest. Security forces have killed 25 people, including at least 15 Muslims in one state, Uttar Pradesh. The federal government has sent troops to the troubled northeast to quell local resentment toward Bengali-speaking migrants, Hindu and Muslim alike.
Mr. Modi has sought to reassure India’s 172 million Muslims that the citizenship law—which speeds up naturalization for non-Muslim refugees from Pakistan, Afghanistan and Bangladesh—has no bearing on their status. The prime minister has also sought to decouple the law from a proposed national database that would list all Indian citizens.
Critics warn that combined with the citizenship law the database would allow the government to disenfranchise Muslims by raising doubts about their documentation. Followers of other faiths would still qualify for citizenship. A similar process is under way in Assam, where Muslims deemed illegal migrants may be herded into detention camps.
A different government might have been able to calm these fears. But though Mr. Modi speaks of taking all Indians along the path of development, his record in office has only heightened worries that India will abandon its commitment to religious pluralism. Mr. Modi and Home Minister Amit Shah have empowered party hardliners accused of violence against Muslims. The bloodbath in Uttar Pradesh is no coincidence. That state is led by Yogi Adityanath, a militant Hindu monk known for his violent rhetoric and for setting up a private anti-Muslim militia.
In August, the Modi government scrapped autonomy for India’s only Muslim-majority state, Jammu and Kashmir, and bifurcated it into two federally administered territories. Authorities have arrested thousands of people—including three of the state’s former chief ministers. Earlier this month, the government’s ongoing ban on mobile internet in the Kashmir Valley set a dubious record—130 days, the longest ever internet shutdown in a democracy.
Meanwhile, the economy continues to sputter. In May, Labor Ministry data showed unemployment in 2017-18 at a 45-year high of 6.1%. Harvard’s Arvind Subramanian reckons that a new method of calculating gross domestic product overestimated economic growth by as much as 2.5 percentage points a year between 2011 and 2017.
In a new paper, Mr. Subramanian and former IMF India representative Josh Felman argue that India is in the midst of a “great slowdown” marked by weak balance sheets in banks, infrastructure companies, nonbanking finance companies and real estate. In November, New Delhi abruptly pulled out of the Regional Comprehensive Economic Partnership, a trade deal that would have integrated India’s economy more closely with East Asia.
Many supporters of the government pooh-pooh concerns about India’s prospects and expect a golden Hindu dawn. But unless Messrs. Modi and Shah can unite a deeply divided society and invigorate a languishing economy, India’s Hindu nationalist strongmen may instead be leading their country off a cliff.
