The world’s largest democracy makes a statement at the polls: No to corruption, bureaucracy and dynastic politics, and yes to Narendra Modi’s promise of a country ready to do business, say Geeta Anand and Gordon Fairclough…
A few weeks ago in Bikaner, a remote district in India’s western desert State of Rajasthan, a group of four young men having lunch at the roadside Karan Restaurant said they were ready for change. Under a Congress party Chief Minister, the State had brought in a new program to give residents free medicine. The young men liked the program but said they were going to vote in the national election for Narendra Modi and his Bharatiya Janata Party because they wanted a future filled with jobs and economic growth—not more Government handouts. “We want Modi. What he did for [the Indian State of] Gujarat, he should do for us,” said Suraj Pal Singh, who works as a lineman for a power company.
In the election results, India’s governing Congress party was shoved aside in spectacular fashion by Mr. Modi, a charismatic politician with Hindu nationalist roots and a pro-business policy agenda, and his resurgent BJP. Mr. Modi’s sweeping victory marks a major turning point in the postcolonial history of the world’s largest democracy. For most of the 67 years since India gained its independence from Britain, the course of the country has been charted by the family of Jawaharlal Nehru, the nation’s first Prime Minister. After Mr. Nehru’s death, his daughter, Indira Gandhi, took the helm of the Congress party and served as premier. And her children, grandchildren and other family members, with some interruptions, have held sway ever since.
But after weeks long national elections, the BJP won 282 of the 545 seats in the lower house of India’s Parliament, according to the Election Commission—the first time since 1984 that any one party has captured an outright legislative majority. Congress could get just 44 seats, by far its worst showing ever. Accused by his critics of dividing India along religious lines after deadly 2002 clashes between Hindus and Muslims, Mr. Modi ended up uniting his country behind a promise of progress and a vision of a strong India ripe with economic opportunity. “It is our responsibility to take everyone forward,” Mr. Modi said in a victory speech before a raucous, celebratory crowd in his home district in the western State of Gujarat, of which he has been Chief Minister. He promised a Government free from special favors and committed to inclusion.
Voters from different castes and regions, rural and urban areas, the middle class and those who want to be middle class—all turned out to vote for Mr. Modi. “This is a big shift. It is the beginning of a post-ideological generation, not left-centered,” says Shekhar Gupta, editor in chief of the Indian Express newspaper. “This is the rise of Indians more interested in themselves. They are aspirational, and they are united in their impatience.” That impatience has soared in recent years as India’s economy has slowed. Growth rates hit a decade-low in 2013 and have been lackluster so far this year—a sharp comedown after a robust growth spurt between 2003 and 2011 that raised Indians’ hopes that their turn at development had come. Corruption allegations and Congress’s inability to mount an effective policy response to the slowing economy have added to public frustration and fueled discontent. A recent Pew Research Center survey found that 70 per cent of Indians were dissatisfied with the country’s direction.
India is poorer and less industrialised than its neighbors in East Asia. And its citizens are increasingly fed up with lagging behind. Fed up that half of households don’t have toilets. Fed up that many aren’t connected to the electricity grid. And fed up that it is so hard to get schooling and good jobs. It rankles to see China and other developing countries “miles ahead in just something as basic and necessary as infrastructure,” says Ashish Anant, a 24-year-old who works as a management consultant in Delhi. “Bringing electricity, roads and water to each home can’t be such a herculean task.”Mr. Anant says he voted for Mr. Modi because, “He’s a doer.”
An India with Mr. Modi in charge would shift from relying on ever-growing subsidy programs to help the poor to making job creation and economic growth the primary tools for development. But this shift away from left-leaning programs as a panacea for India’s problems doesn’t mean an end to them. Mr. Modi is unlikely to substantially undo any of the subsidy programs on which millions rely for jobs and food. Still, his Government’s central thrust will almost certainly shift from strengthening the social safety net to streamlining India’s sluggish, graft-ridden Government bureaucracy and spurring business growth.
Under Congress, some of India’s largest industrial projects stalled. A $12 billion steel plant proposed by the South Korean developer Posco was put on hold in 2010 after local forest dwellers objected, despite the fact that environmental clearances had already been granted. It would have been the largest foreign direct investment in India. A London-based company, Vedanta Resources, has seen its bauxite mining plans foiled after local opposition. The Congress Government has often seemed powerless to negotiate compromises, resulting in bottlenecks in the development of infrastructure and industrial projects vital to India’s growth. In 2010, as the country struggled to meet vast infrastructure needs, the Indian Steel Ministry estimated that steel projects valued at more than $80 billion had been delayed because of problems with land acquisition and environmental clearances.
In contrast, the Gujarat Government under Mr. Modi seemed able to remove red tape to allow businesses to build factories and expand. The most famous case involves one of India’s biggest conglomerates, the Tata Group, which was acquiring land in West Bengal State to build a factory to produce its new, ultracheap car, the Nano. The Government of West Bengal in 2008 withdrew support for the plant, in the wake of protests by farmers. Mr. Modi personally courted Tata’s management and persuaded the company to move the project to Gujarat. The speed with which Tata was able to acquire land and build the new Nano plant in Gujarat made Tata Group’s legendary former CEO, Ratan Tata, a supporter of Mr. Modi.
Mr. Tata is far from the only business leader to sing Mr. Modi’s praises for the ease of obtaining permits to open businesses and acquire land in his state. Duravit India, a unit of Germany’s Duravit AG, built a factory for ceramic tiles and sinks in Gujarat in 2010. Ashutosh Shah, managing director of the Indian unit, said at the time that he was astonished by the process: “It was a 100 per cent, corruption-free process. You have to experience it to believe it.” Canada’s Bombardier, which won a $650 million contract to manufacture coaches for New Delhi’s new metro train network, located its production facility in an industrial park in Gujarat after scouting several options. After contacting Gujarat in August 2007, Bombardier got a 50-acre plot of land within weeks. Its plant rollout was one of the fastest in the company’s history, an official in the company’s Indian unit said.
Taxation is another issue. Vodafone has been sparring with Delhi for years over a $2 billion tax bill. After India’s Supreme Court ruled the company didn’t have to pay, India’s Government changed its laws retroactively to allow it to impose the tax. Other big names currently embroiled in tax fights in India include AT&T, SABMiller and Nokia. The BJP says the Congress Government’s approach in such disputes—which it termed “tax terrorism” in its election platform this year—has contributed to the country’s image as an arbitrary and hostile place to do business. “Our taxation policy will involve simplification and rationalisation,” Arun Jaitley, a BJP leader, told reporters in Delhi at the start of the campaign. “There will be no unpredictability.”
Mr. Modi and the BJP cast themselves as pro-business, but this must be interpreted in the Indian context. Analysts think big-bang reforms, such as changing labor laws to let companies hire and fire more easily or undertaking large-scale privatisations of State enterprises, are unlikely. The BJP opposes foreign investment in big-box retail. A BJP spokeswoman said recently, “We aren’t going to open floodgates immediately.” That said, Mr. Modi will be under immense pressure to spur the economy and would face the wrath of voters if he failed to do so. Luring more foreign investment—at least in other sectors—would be one way to do it.
Mr. Modi’s promise of better days resonated especially with young people, in rural as well as urban India. About 100 million new voters registered for the first time this year, many between the ages of 18 and 24, the Election Commission said. The disdain for Congress that has grown across the country was evident in the election results, a defeat so crushing that some analysts predict it could mean the end of the Nehru family’s decades of dominance in Indian politics. “This is a rebellion against a sense of entitlement,” says Mr. Gupta, the Indian Express editor, based on the perception not only that “the people in power took no responsibility” but also against Congress’s vision that the best way to move India forward was by more Government programs to help the poor.
Still, cleaning up corruption and spurring growth won’t be easy tasks in a country as massive as India, says Sudheendra Kulkarni, who worked as a speechwriter for previous BJP Prime Minister Atal Bihari Vajpayee. Voter expectations are so high that Mr. Modi will lose support rapidly if a corruption scandal erupts under his watch, Mr. Kulkarni said. “He’s a smart politician, so he’ll be doing everything he can to project the image that he’s fighting corruption,” Mr. Kulkarni says. “But it’s going to be very hard to achieve.” It also may not be the end of the Congress party, which has fallen out of favor before, only to return.
Amid religious strife in 1996, Congress was voted out and the first BJP Government ushered into office. But the BJP, while winning the most seats in the election, didn’t have a clear majority and needed other parties to stay in power. Three different Governments rose and fell over the next three years. In 1999, the BJP returned to power and lasted a full five-year term. The party burnished its nationalist, hawkish image by carrying out nuclear tests, in defiance of the U.S. and its allies. The party pressed ahead with a program of economic liberalisation started by Congress—and which the BJP originally opposed.
Despite a growing economy under the BJP, Congress made a comeback in 2004 under the leadership of Sonia Gandhi, the widow of former Prime Minister Rajiv Gandhi, who was assassinated in 1991. Manmohan Singh, a key architect of the economic reforms, became premier. During Congress’s first term, the economy boomed. But as the global economy slowed in 2009 and 2010, the party struggled. It didn’t have a clear majority in parliament, and many of its coalition partners opposed additional liberalisation needed to spur growth. Congress doubled down on welfare programs—passing a law to guarantee low-cost grain to a large proportion of India’s 1.2 billion people and another piece of legislation to raise the prices that the Government or companies must pay to acquire land.
When it came time to campaign again, Mrs. Gandhi’s son, Congress’s vice president, Rahul Gandhi, was drafted to lead the electoral charge. But Mr. Gandhi prefers to play a more behind-the-scenes role in the party and often appears to be a reluctant politician. He ultimately failed to ignite the passions of voters. It was a sharp contrast with Mr. Modi, whose personal charisma has helped create a cult of adoration around him. Tales of his bravery are chronicled in a comic book that shows him swimming through crocodile-infested waters to plant a flag on top of a Hindu temple. His supporters often wear masks emblazoned with his face and hail him with chants usually reserved for worshiping the Hindu gods.
“We want jobs and a good economy,” said Lalit Ramavat, who owns the Karan Restaurant in Bikaner and who supported Mr. Modi. Mr. Ramavat said he named his dog Manmohan after Mr. Singh, the Congress party’s Prime Minister. As he explained, “the dog doesn’t bark.” Still, the Congress party set the groundwork for this historic shift in Indian politics by helping to create the new aspirational class that has now opted for change. As India turns the page, at least for now, on the Nehru dynasty that has long dominated its political life, the country is rejecting the entrenched corruption and bureaucracy that have long frustrated everyone, from top industrialists to ordinary workers, and hamstrung growth. Mr. Modi inherits a country that is now impatient with its leaders. It remains to be seen whether he and the BJP can refashion it in their own image. But they are clearly determined to try—and to try to change India for not just an election cycle but for years to come.
(Raymond Zhong, Niharika Mandhana and Aditi Malhotra contributed to this article.)