New Delhi: India under Narendra Modi is the fifth biggest geopolitical risk of 2020, according to the world’s leading political risk consultancy, Eurasia Group.
The consultancy’s annual ‘Top 10 Risks’ of the year list is considered one of the foremost geopolitical indicators among global investors, multinational firms and various financial and business consultancies.
“Prime Minister Narendra Modi has spent much of his second term promoting controversial social policies at the expense of an economic agenda. The impacts will be felt in 2020, with intensified communal and sectarian instability, as well as foreign policy and economic setbacks,” said the Eurasia Group’s report.
Titled ‘India gets Modi-fied’, the analysis has been co-authored by the president of Eurasia Group, Ian Bremmer.
It’s a change of position for Bremmer, who had earlier argued that “Modi is India’s best hope for economic reform” in the May 2019 edition of Time magazine, the same edition in which author Aatish Taseer had called the prime minister “Divider-in-Chief”.
The top three risks on the list are increasingly unstable US domestic politics under President Donald Trump, “decoupling” of US and China in the technology sphere, and hostile US-China relations.
‘Amit Shah behind Modi’s radical shift’
Eurasia’s report talks about how since his re-election in May 2019, Modi’s government has adopted a “contentious” social agenda, which not only comes “at the cost” of India’s economy, but also “challenges the secular and democratic foundations” of the republic.
“Modi and his government have been busy in recent months. They revoked the special status for Jammu and Kashmir and implemented a system to identify illegal immigrants in the northeast, stripping 1.9 million people of citizenship,” Bremmer and co-author Cliff Kupchan write.
“The government also passed a law that, for the first time, makes religion a criterion for migrants from neighbouring countries to formally acquire Indian citizenship,” the authors say.
The report goes on to talk about how Home Minister Amit Shah is responsible this radical policy shift. “Behind these moves is Amit Shah, the former (sic) head of Modi’s Bharatiya Janata Party (BJP), now home minister,” it states.
Bremmer and Kupchan note that protests have “spread around India”, due to citizens’ fear of India losing its “secular identity”. But regardless of growing protests, “Modi will not back down”, they state.
Spill-over on India’s foreign and economic policy
The Modi government’s social agenda will also have “harmful effects for India’s foreign policy”, the authors claim.
“Its actions on human rights will be under closer scrutiny by many nations, and its reputation will take a hit,” they contend, adding that changing attitudes in the US Congress towards India are likely to further impede US-India ties.
In terms of the economy, the Eurasia Group argues that under Modi, the economic nationalist Rashtriya Swayamsevak Sangh, the BJP’s ideological fount, has become increasingly powerful.
“An empowered RSS means that Modi has less room to manoeuvre on structural reforms, just as the economy is starting to sputter, with quarterly growth falling to a six-year low of 4.5 per cent and forward-looking indicators looking softer still,” notes the report.
“The RSS influence was evident in Modi’s decision to drop out of the Regional Comprehensive Economic Partnership negotiations last year and will be a big reason why India is unlikely to rejoin in 2020,” it adds.
The report ends by stating that a weakened economy “will in turn feed further economic nationalism and protectionism, weighing on India’s troubled course in 2020”.
Changing stance on Modi
Bremmer and the Eurasia Group had been bullish about India’s prospects since Modi was elected in 2014.
“The biggest opportunity out there right now has got to be India. I mean, you’ve got a prime minister who is enormously popular because he is clean and he is capable,” Bremmer had said in 2017.
“When he was running Gujarat state, it was experiencing double-digit growth. You were able to travel there and see that you could set up a business and the infrastructure worked. I think more of India will start looking like Gujarat because of that,” he had argued.
In his May 2019 Time article, Bremmer had struck a more cautious but definitely optimistic note about Modi.
“Modi has the instinct to dominate and the thin skin of other strongmen, but he also has a genuine track record in providing the kind of reform that developing India urgently needs,” he had written.
But after Modi’s re-election, the tide soon turned, and by December 2019, Bremmer had publicly reversed his position. He wrote for Time again last month, and the article was titled: ‘I argued that Narendra Modi was India’s best hope for economic reform. Things have changed’.