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If Modi is a true reformer, he’ll bury Vodafone ghost and campaign on reforms in Bihar

No politician sees economic reform as a vote-catcher; it’s the old, povertarian economy that gets votes. Can Modi bring farm and labour reforms centre-stage?

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Political commentators are sometimes lampooned as intellectual gymnasts. So here we are, living up to that description, by drawing a connection between an international arbitration tribunal’s ruling favouring Vodafone in its case against India’s Rs 20,000 crore retrospective taxation claim and the coming Bihar elections, the dates for which were announced as this column was being written this Friday.

Both cases, in their own different ways, provide a challenge and an opportunity on behalf of the new economy and politics against the old. The Vodafone order has come just after its author and probably the last three decades’ biggest believer in the older versions of both, Pranab Mukherjee, passed away. It follows that anybody who had those two sets of old beliefs was also a statist. Which he was.

In decades of interacting with Pranab Mukherjee, I can say that I came across no public figure as statist as he. His response to this arbitration order would have been a furious, ‘who are they, we are the sovereign’, spoken with gritted teeth. He would have immediately challenged it and put the might of the Republic against it.

Read the third volume of his memoirs which I wrote about in an earlier National Interest. Rather than be defensive, he had boasted that whatever anybody might say about his amendment, nobody had dared to reverse it in almost a decade. That included three years under Narendra Modi. The conclusion he drew from it was that there was such political oomph in his idea that neither the architect of 1991, Manmohan Singh, nor the ‘Gujarat Model’ reformer Modi had challenged it.

Then, Bihar is the first election after a flurry of what the Modi government proudly describes as its most audacious reform, usually with a taunt for the critics: You said we hadn’t done any Big Bang reform? What will you call this? Both of these, on agriculture and labour, are likely to cause short-term unhappiness among large voter groups already reeling under economic distress.

How Modi and Amit Shah build this campaign is the most important indicator to watch. Will they flaunt their big new reforms, changes and risk-taking ability? Or, will they hide from all that and talk only about the free grain and cash payouts they gave away in the pandemic?

Also read: Divided by a virus — why the pandemic makes it look like nobody is in control in India

Political experience would tell you to avoid any talk of reform or a promise of future prosperity in a campaign. As Montek Singh Ahluwalia wrote in his memoir ‘Backstage’ and said in his conversation on our show ‘Off The Cuff’, reform in India happens by stealth.

No politician sees economic reform as a vote-catcher. It’s the old, povertarian economy that gets the votes. I would underline Modi’s big 2019 win in spite of an indifferent economy, predominantly because his welfare schemes like cooking gas, toilets and MUDRA loans had had a wide impact among the poor. What route will Modi now take in Bihar, India’s poorest large state?

This is how the Vodafone arbitration order and the Bihar election both confront him with a twin challenge. Old economy and older politics would suggest that he challenge the Vodafone order, let it fester and go back to giveaways in Bihar. But if he’s bold, he would humbly — actually, gratefully, because it resolves an old problem — accept the Vodafone verdict, and go campaigning to Bihar talking reform and prosperity. Done together, both have the spark to ignite a new economic optimism in India. Whether they will guarantee yet another win for his coalition in Bihar, we can’t say.

The old political argument against the reformed, new economy is formidable. The pain of reform comes immediately and affects many more. The gains come much later and will still leave far too many unhappy. Not necessarily because they are worse off, but they see some others doing much better: The familiar rich-getting-richer syndrome when the poor, even if they are doing better than before, feel even poorer in comparison.

Bill Clinton, when he visited India in 2006 after the UPA came to power, made this point brilliantly in his short speech at the Rashtrapati Bhavan banquet. We are all surprised, he said, that Vajpayee’s government lost despite taking India’s growth rate to seven per cent. How can you lose when your growth rate is that high? Because, he said, those that benefit most visibly are much fewer than those that feel left out in comparison. This is hard politics.

Also read: Why India’s triple crisis needs Modi to de-escalate & disengage from divisive politics at home

In any case, once people benefit from reform, their politics can change in surprising ways. India’s urban middle classes, who owe much of their booming prosperity of the past three decades to Manmohan Singh and the Congress, overwhelmingly vote for the BJP since 2014. In fact, they so deeply detest the Congress and the Gandhi family, they will continue blaming them if the economy goes on declining, and keep voting for Modi/BJP.

This was also the apparent logic for the Left Front and Lalu Yadav not letting modernisation and growth come to the neighbouring states they respectively ruled for decades. Let them rot in their caste and ideological bunkers.

The third problem with reform-generated growth is, it necessarily increases inequality. As the old logic goes, a rising tide lifts all boats, but it lifts the yachts first. Apply that to Bihar — a state at the lowest end of the Indian economy’s value chain, an exporter of cheap labour to the fast-growing states.

It should follow that it’s also at the most distant end of the pipeline that reform opens up. Its farmers do not produce much surplus, and it is not about to suddenly begin creating millions of white- or even blue-collar jobs. It would be tempting, therefore, to avoid ‘pangas’ with this key election.

Politics in Bihar is always complex, and local factors are formidable. But this one is our most ‘bad news’ election in a long time. The pandemic is raging, deaths are rising, the Chinese are being troublesome and the economy is in a free fall. Plus, we have the lived political experience of a talk of reform and growth not working in elections, especially when you are seeking votes as an incumbent.

We say that before you ask if Modi did not promise growth in 2014. He did, but as a challenger. As an incumbent in 2019, he was besting Pakistan and busting corruption, not promising the ‘Gujarat Model of Growth’. In 2004, Vajpayee lost despite going to the polls on an ‘India Shining’ growth high. The Congress still believes that it lost 1996 and 2014 because of reform, and won 2009 in spite of it. Why would Modi take a chance now?

That is the reason this twin test is so important. If he’s truly a reformer and a believer in minimum government, he would bury the Vodafone ghosts now. He would also then go to Bihar, campaigning on his politically controversial reforms. Both will need him to dip deep into his accumulated political capital and risk it. Whether he does so will answer our central question: Will reform be brought to the centre-stage of our politics now? Otherwise, it will continue to be done episodically, by stealth.

Also read: Why Modi doesn’t feature in a list of India’s reformist prime ministers


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  1. India is unfortunately doomed to be a poor country or at best a lower middle income one (which we currently are) – because we keep poverty at a high pedestal. Look at the discourse by supposedly educated people, for them anybody earning more is a chor and poor are the most upright people. While the reality is it’s the poor who commit the most heinous crimes – most notably the sexual ones.
    Rape is a class and patriarchal problem as is povertization of vote bank. Modi seems another Indira Gandhi in garibi-hatao redux which only meant gareebo ko badhao to reap votes.
    H1B, and then Green Card here I come.

  2. Crediting Maunmohan Singh and Gandhi family for 1991 reforms is laughable and yet another sad attempt to glorify the 10 JP and its chamchas.

    Reforms in 1991 were carried out at the suggestion of IMF, who made these reforms a condition for a $2 billion loan that the GOI was seeking to avoid the ‘Balance of payment’ crisis.

    PM Chandrashekhar had given the approval for the reforms much before Narasimha Rao became the Premiere and even for Rao, Dr. IG Patel was actually the first choice for the post of FM, to oversee the reforms. Maunmohan Singh being the FM during the reform process was purely incidental.

  3. Agree… Middle class is benefitted by Narsihma rao govt reform , so what’s great in that ? It was MMS himself who defended the reforms by quoting Victor Hugo “no power on earth can stop an idea whose time has come”. So being in govt , it was their duty which they did well. Kudos to both. But that does not meant it is a kind of life long boundation on middle class and it’s upcoming generations to keep voting for them always, irrespective of misdeeds of their political leaders. It is against the very core spirit of democracy. Are middle classes and their generation s got bought because of reformed ?

  4. the statement ”it’s the old, povertarian economy that gets votes” itself tells what any political leader has to do to get votes. The more the educated, the more dumb the people.. this is what we see today in the society. So blaming Modi or Rahul or any other leader is no use.

  5. Modi is not a true reformer of the economy, he is just a Hindu snake charmer, wearing designer clothes, oddly of a Muslim style.

    He plays the pipe, and the cobras nod their heads. They cannot hear, they follow the zig zag pattern he weaves with his pipe. The Hindus who follow him zig zag and nod on corruption, LAC, Covid, economy…..!! After his show, he collects money and goes.

    That is the popular image of India.

    • “Muslim style”? Never saw him wearing a Jubba, he wears churidars and handsome “Jodhpuri suits”.

      He ain’t a Hindu(Indian) snake charmer nor is he a Muslim hakim offering “shartiya ilaaj”for India’s woes in 7 days.

    • That is the image you wish people of india have in their minds. But it can only be happening in your dreams. Modi is one of the best PMs India ever had. Even Imran Kahn, who is shitting at every given opportunity, praised him for his fight against corruption before he came to power. If congress was in power these last 5 years India would have been in medieval age. For you killing people in the name god is right culture. Sorry, you straying away from PAK. stay there and in your own filthy place.

  6. No one blames modi for corona…its China’s doing. And for economy….its Corona ‘s doing.

    Baki pta nhi.

    • is it only Modi’s responsibility? what about state govts? Did congress top leaders take any responsibility for any wrong that happened in this country? they r first to take any credit when some good happens.. so why blame Modi for everything? MH, Rajasthan, Andhra, Telangana, Punjab states are ruled by non-BJP govts. How better r they than the BJP ruled states? Just think and u will get the answer

  7. India should also have Special Economic Zones and build areas to attract industries from outside. This is something Singapore and then china successfully implemented.

      • You seems to be something against gau shalas. After all even if it exist, it only protects animals. You do not need to treat them in distains. For hindus everything is related and needs to be respected and protected. It doesn’t always have to be only humans. It is beyond your intelligence to understand.

      • India should never become like China. Even if it become the first once to suffer would be muslims and other minorities. Look at ughers (sic).

  8. ‘who are they, we are the sovereign’ — Biggest argument against will be he lampooned the the sovereignty by reversing India’s supreme court Judgement. How much banana republic you can get ?

    Its sad the subsequent govts and civil society did not stand up for the rule of law.

    Its not Vodaphone, its rule of law at stake. But congress did this again and again with no consequences … Shah Bano, Fundamental right to property etc etc

    • Stop complaining about Congress. The question is what is Modi doing to correct it ? He is concentrating on re-writing history through fabrication, and selling off assets to Ambani and Adani. He is running a nafrat ki dukan. Hindu-Muslim. That is what Hindus like you voted for.

      • why should we stop complaing about congress? it is the only alternative party to BJP and it is obvious that people will think what Congress did during its rule. Why did Muslims like u voted for congress, SP and RJP knowing that they r corrupt parties to the core

        • @rasgolla is a hindu hater. Most likely a Paky. Ignore him. I hope BJP stays in power for another 10 years. The world economy is suffering from past 5 years. We are also part of this globalized world. Any body with open mind can see that. Even Europe was also struggling. Our economy was in sharp decline by the end of Congress. Banks had so much bad loans. Blaming BJP blindly is not going fix any thing. Corona virus and shutdown of economy is only hurting us more. People like @rosgolla championing for (like muslims) had secret community gathering and spread the virus all through the country. They also did violent protest knowing that the time is not right. He, however, never talks about that.

      • Pretty much all the countries, barring US, did bad in the past few years. Even US did well using trade war tack ticks. If it is not for Modi India would have been in much worst than what it is now. At this moment, BJP is the only part to lead the nation. Congress cann’t even stand in line for this. I am not a great fan of Modi. But If wish any thing good for India, I can not think any other better party.

      • I am happy, he is selling off so called “assets”. Govt job is to ensure education health and security. None of this past govts did, why is that 70 years after Indian’s are still illiterate ? 450,000 die every year with TB (yes its more than corona) ?

  9. BJP should not get carried away too much about border or covid. They have great opportunity for reform now. Do not miss this. We will never get this chance again. If we get distracted by these our enemies (China and Pakistan) will win. Takeout reforms with the help our experienced people and right implementation. You can swing back to popular policies (vote winning) in last two years. Right now your focus should be how bring back country back on it s feet from covid and bring reform at rapid but well though out manner. Opposition should also put their personal hatred towards BJP and cooperate on reforms and steps the government takes to bring the country out of Covid. People will see what you have done as an opposition party. Until now all u did was to weaken the government by spitting venom at every possible opportunity.

    • They have given up on Covid and China – don’t know what to do.

      ‘Takeout reforms with the help our experienced people and right implementation. ‘

      They do consult with RSS. No on else can work with BJP.

      They have sown so much enmity that only Hindu fascists, rioters, rapists, and mobsters can work with them, so get real.

  10. He will continue with reforms, but will not use it for politics unless he sees visible gain to public at large. He will use only winning slogans in elections. That’s also sensible. You cannot trick him to talk about reform and loose

  11. Shekar sir you sound very optimistic about new farm reforms I hope this does not become like modis other historic reforms demonization and GST

  12. Ruchir Sharma of Morgan Stanley foresees Indian growth to remain below 5% for several years. Given the scale of inequality, that will mean no improvement in the lives of the poor, whose numbers are now actually growing after decades of steady decline. The only way to break the mould is through reforms that ripple throughout the economy. Not just agriculture, where a rocky start has been made, but banking, power, privatisation, cuts in government expenditure, including subsidies. A new kind of politics which allows consensus to be created around contentious issues is required. Also a foreign policy that is less jagged, abrasive. Bihar, despite CM Nitish Kumar’s lacklustre record, will probably be won. However, how taking what is now almost the world’s most populous nation to a better place remains a challenge which these successive mandates provided the opportunity and the political capital to overcome.

    • Modi has given up on the economy, Sitaraman thinks it is act of God, BJP is run by RSS and other dacoits. You can forget hoping for the economy. Even MMS cannot restore it. Ruchir Sharma is right.

      They will concentrate on what they know : Hindutva.

      SG for once nailed the scenario accurately : ‘India’s urban middle classes, who owe much of their booming prosperity of the past three decades to Manmohan Singh and the Congress, overwhelmingly vote for the BJP since 2014. In fact, they so deeply detest the Congress and the Gandhi family, they will continue blaming them if the economy goes on declining, and keep voting for Modi/BJP.’

      The Hindus aged 25-55 that got wealthy due to MMS and Congress, now hates them. They got starry eyed about Hindu grandeur. The BJP arrived on the scene at the right time to profit from the era of wealth created by MMS. The next generation, their children, will face the shrinking economy.

  13. Shekhar, great article! You are one of the few who understand the reason why economic reform, growth is not natural in India. It is counter productive politically to pursue them. The status quo is quite depressing, nihilistic (in terms of growth) albeit the harsh truth.

    There will however be a lot to learn from the Bihar elections as you rightly pointed out.

  14. ‘State elections are fought, won and lost on state issues – not national issues.’

    One ‘national issue’ called Hindu communalism works both at national level and at state level in most states. In Gujarat, UP etc. , Hindu communalism has worked in state and national elections. The BJP has no other model. The BJP’s success at national and state level has been due to playing the Hindu communal agenda, that is the anti-Muslim plank. They are trying it desperately in Bengal and Kerala, as they have no other card.

    • Congress is Wrecked ship filled with wolves. No one wants themselves to be a captain. Everyone wants the other to be one so that I can abuse behind the curtains. So puppy was rather pushed forward so that when eventually congress wins they can have a feast as congress loyalist members. Congress has no one loyal to the nation. or has nationl interest in mind.

      • SG described Hindus like you correctly : ‘India’s urban middle classes, who owe much of their booming prosperity of the past three decades to Manmohan Singh and the Congress, overwhelmingly vote for the BJP since 2014. In fact, they so deeply detest the Congress and the Gandhi family, they will continue blaming them if the economy goes on declining, and keep voting for Modi/BJP.’

        You became selfish and greedy. A little bit of money and power goes to the Hindu head. Now wait till the BJP empties your pockets and the next generation of Hindus will be slumdogs. It is happening before our eyes.

    • You seems to be anti-hindu. Which in and itself reflects what you are. India a majority hindu state gave space for muslims and give chance for your beloved congress for 70 years. What they did. Sharia law, reservation based on religion, different laws in states where other religions are dominant, blame hindus for every violent incident even though everyone is equally at fault. You seem to imply that India is only democracy if muslims get free ridership. I am sorry, democracy is something that everyone needs to adopt in all its content and spirit. Putting that burden only on hindus and says muslims are exception because they are miniortity or it is against their religion is wrong. Yes BJP should focus on nation building that everyone can should easy identify themselves with. So lesser cow vigilantes and go moother ranting the better. May instead out hating BJP that much, even muslims are contest on behalf of BJP and help BJP focus on nation building and to prevent it from distractions.

    • Infact, Jammu and kasmir is the perfect opportunity for muslim youth there to contest in election along side BJP and give tight slap to other communal parties in J&K. That way they can save the beautiful state from violence and provide future to the people .

  15. SG for once has captured the selfish Hindu middle class correctly :

    ‘In any case, once people benefit from reform, their politics can change in surprising ways. India’s urban middle classes, who owe much of their booming prosperity of the past three decades to Manmohan Singh and the Congress, overwhelmingly vote for the BJP since 2014. In fact, they so deeply detest the Congress and the Gandhi family, they will continue blaming them if the economy goes on declining, and keep voting for Modi/BJP.’

    The Hindus who became rich because of MMS hate him the most, call him Mauni Baba, controlled by Vatican etc. These Hindus became greedy, and wanted all the cake. And indeed, ‘they so deeply detest the Congress and the Gandhi family, they will continue blaming them if the economy goes on declining, and keep voting for Modi/BJP.’ We see that in the feedback letters from Hindus; in the words of one retired Hindu army man who pontificates here, Modi is running 24 hours a day to catch up with other nations, after the lag caused by 70 years of Congress !

    Realistically, Modi cannot do any serious economic reforms. It is outside his knowledge and interest, and he is surrounded by similar types. For the RSS-BJP, reform means re-writing history showing Hindu greatness, promoting Hindi, promoting Hindu mythologies, and above all attacking and marginalising Muslims. I think most Hindus will go along with this, as their attraction for Modi is Hindu communalism, not economic performance.

    • I am sorry. Please do not forget the damage Congress did in last two terms. MMS did well under Narsimha rao where he had free hand. As a PM he did not enjoy the same freedom. Moreover, he was helpless why congress was looting the country. No one hates MMS. But disapproved him for his performance as PM. Congress had a great opportunity (70 years) to put the country ahead of china. But they destroyed the nation. All did was to divide the country on communal basis. (more and more reservations, free money, license raj, highjacking of country during emergency and blaming Hindus for everything etc) They just cleverly used and still using minorities to promote them self. Only in BJP Governance India can move forward.

      • Keep the BJP’s Hindutva propaganda to yourself.

        SG has explained : it was MMS and Chidambaram who created a wealth middle class of 400 million. They catered to the different layers of the Indian economy.

        Modi has dismantled that. Yes, there was corruption, but all the BJP’s action reek of corruption – demonetisation, Rafale scam, PM Cares etc.

        ‘Congress had a great opportunity (70 years) to put the country ahead of china. ‘ India cannot be like China due to the Hindu caste system. Sooner or later the reactionary caste Hindus will want all the cake – which is what Hindutva is about.

        Casteism and communalism are byproducts of Hindu society, not Congress. The BJP thrives on the same – even more starkly, but you are alright with it, because it favours high castes like you.

        ‘Only in BJP Governance India can move forward.’

        Why is India then fallen backward ? Economy, inept Covid control, China taking land, and constant Hindu-Muslim bickering. India is heading for economic collapse and it is better BJP gets elected one more term and takes credit for it.

    • One should vote only for party that takes minorities along side Majority (hindus). Any party (ex congress) that uses minorities and expend majority should be kept outside the governance. Hope we find new opposition party which takes everyone together. Congress must perish so give space for new party respects democracy both in its talk and actions. India does not want party that just uses minorities . The fact the BJP can with so much majority is slap on congress. But still stuck in old politics and has no courage to reform themselves. You seem to talk only about muslims and hindus as if no other religions exist. Muslims chose to stay in india during partition. In fact, the onus is on them to show the intent. So, they should also embrace democracy . No more entertaining special laws and rules under the grab of religions. India should follow one law and one nation.

      • Well, Modi has brought all the changes you desire, and in fact it is now ‘Hindus first, minorities do not count’. Yet, India is seen as going in the direction of failure and economic collapse. See what was written in the western press at the time of MMS, and see what they write now.

        You have only Hindu communalism on offer. See where it gets you.

        • I disagree. Minorities (including Muslims) just like anyone else. I minorities do have same privileges and rights just like anyone. Infact minorities still enjoy more benefits than majority. You are just lying.

      • It is because indian politics is about castes. Congress and it’s likely coalition will no longer represent the dominant castes. Prosperous middle classes also have a caste. They support parties according to their caste .

    • Only an illiterate piddi can credit Maunmohan or Congress for 1991 reforms just like they credit Rajiv Ji for “bringing” internet in India and Nehru ji for “bringing” democracy in India.

      1991 reforms were IMF’s reforms, so India can get a $2 billion loan to come out of BoP crisis, thanks to decades of Nehruvian economic mismanagement.

  16. Every politician in the world talks of welfare politics of underprivileged mostly. They are the vote bank. Other policies are pursued without much fanfare. in the business circle and at international level. Hungry people need food immediately and job ready skills later.

  17. When Modi talks or reforms I an reminded of the the reforms to make political funding more transparent ! ELECTORAL BONDS made funding transparent only we DO NOT KNOW WHO THE DONORS ARE !

  18. Well written, Shekhar Sir. this disconnect between electoral gains and bold reforms whose benefits take time to materialize is one of the main reasons why our political leaders are so reluctant to bring in reforms. Another reason is simple, pure apathy.

  19. Sir, with due respect, I feel that your writing often contains too many caveats and diversions in between so as to lose the reader midway to what you were saying. This write-up is straightforward with not too many roundabout arguments. It is more pleasant to read. As always, you made an excellent observation.

  20. Modi is a bold reformer is a myth. At the most he is a bold event manager and has consistently failed to deliver on the economic front. Poor Indians have been taken for a ride and will continue to remain poor till the foreseeable future. Middle-class Indians will find each generation having to toil harder to maintain the lifestyle that their parents had and having to spend more and more on school education for kids, house and vehicle EMIs and other necessities. Ultra-rich Indians will continue to have it good under Modi sarkar. Meanwhile the SSR-Rhea Chakraborty media circus is creating the necessary smoke and screen so that Modi can claim that like demonetization the rich Bollywood fat cats suffered due to him and people of Bihar will lap it up, forget their misery and continue voting for him – for details refer to UP election 2017. The regret will come later and then another circus will get cooked up by the BJP election machine – rinse and repeat as necessary.

    • You summed it up correctly. SG has also done so. The middle class Hindus who became prosperous due to MMS, so deeply detest the Congress and the Gandhi family, they will continue blaming them if the economy goes on declining, and keep voting for Modi/BJP.’

      Let us not forget at the end of the day, Modi got elected due to a Hindu consolidation. That was achieved not due to any economic model, but due to Hindu communalism. That is what they know how to play, it has succeeded, so why would they not continue to play that ?

      • didn’t congress, Mulayam, Lallu came to power by minority appeasement? If they do u r ok.. and u r ok if they do on the name of caste or minority appeasement? this country has become politicians playground long long ago. Blaming just BJP will not solve anything

  21. When Toyota said taxes were too high, when Harley Davidson closed down, also partly because of high prices, when taxes are applied retrospectively, its only because the government encourages the tax department. Taxes are and will be the primary income of this country.

    And entrepreneurship and ability to enjoy buying a reasonably priced product out of one’s hard money be damned.

  22. The most fundamental truths about Indian politics:
    1. National elections and state elections are two completely different ballgames.
    2. State elections are fought, won and lost on state issues – not national issues.

    This article/argument is a shocking mistake from India’s #1 political analyst.

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