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BJP’s Economic Policy Rollercoaster

In 1991 the Indian government, under the guidance of Congress’ P.V. Narsimha Rao and Manmohan Singh, transformed the face of the Indian economy; what was considered to be a slow-growing, closed-off country was now on its path to becoming an economic giant. It has been a balancing game since then; throughout its history, Indian economic policy has seemed to be divided between two stark viewpoints: the free market model that ushers in globalisation and is steered by the private market, or the protectionist system focused on welfare statism. This article focuses on India’s current ruling party, delving into Narendra Modi’s implementation of economic policy and how he has traversed its tricky path.


In the years the BJP has ruled India — the late 1990s, and 2014 onwards, the party has been wrestling with the same old Indian dilemma: whether it should make the role of the state more prominent, or that of businesses; and, within businesses, should it open the doors to the world, or focus on promoting and protecting domestic businesses?


The Beginning: Modi’s Rise to Fame


From the time Modi rose to prominence in the early 2000s as chief minister of Gujarat, the now prime minister has been noted for his affinity towards promoting business and entrepreneurship, stressing such inclinations on different occasions. And indeed, under his leadership, Gujarat's state economy grew at a faster pace than the national average for more than a decade. During that time, Gujarat also transformed from a power-deficit to a power-surplus state, and managed the difficult task of achieving growth in agriculture while reducing its share in the state's gross domestic product. Gujarat became a model state that was able to free up space for private initiatives and enterprises, all due to the enabling environment by the State itself.


The Peak: Modi’s Sustained Rise to Fame


After Modi’s time as the Chief Minister of a state that grew well economically under him, his next step was Prime Minister. Modi’s rise to power as prime minister in 2014 came with great expectations of a barrage of economic reforms. Since then, the government has brought several significant changes in the economic environment — including introducing a transformational bankruptcy law and pushing through the long-awaited Goods and Services Tax. However, the government has been hesitant to address issues of land acquisition, or labour, especially those involving wages and retrenchments because they often become mired in political protest and carry the risk of being used against the party during elections.


The Tale of Welfare Statism


The Modi government also embarked on a mission to build toilets for every household in India and announced that by the end of its first term in 2019, around 90 million of them had been built. In the same period, around 80 million gas cylinders were handed out to help women (especially in rural India) escape indoor air pollution — which kills more than four million each year around the world, and more than 350 million LED bulbs were distributed. Around 100 million people received e-cards that would help them access cashless treatment schemes under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), the national health insurance scheme. Under the name of multiple other schemes, the Modi government has provided direct supply of essential goods and services to the poor, cutting the private middleman out completely.

Through this entire process, what the Modi government has strived to create is a direct benefit interface with the average Indian citizen — and of course, the voter, with the underlying promise that retaining him in power will result in tangible benefits in their day-to-day lives. Philosophically, the strategy is the public policy equivalent to his regular radio show, Mann ki Baat, where he shares his thoughts with the citizens. It could also be compared to the artful use of his Twitter account, where he now has more than 50 million followers — a tool for engaging in direct conversations with the citizen. On the surface, it appears that every delivery of a good or service has the imprint of Modi on it.

The Potential Downfall

The question then remains is whether Modi is a growth-fanatic, pushing for private initiatives, or if he is transitioning to a welfare state model. Many scholars have pointed out the differences in the economic thought of the Rashtriya Swayamsevak Sangh, the ideological parent of the BJP, under whom Modi rose to politics. The second head of the RSS, M. S. Gowalkar, for instance, denounced both communism and capitalism for confining man’s experience of life merely to the material. Gowalkar also argued that the success of any government or any particular theory of government is to be measured in terms of its capacity to give every citizen two square meals, a place to rest in, sufficient clothing, treatment in case of illness, and education.


It seems that spokespeople from both RSS and BJP seem to favour capitalism, but they choose to conveniently hide it under the garb of old Indian traditions and a benefit-for-all system, when in reality they are just pandering to the age-old dogma of capitalism. Looking at the way the Modi government is implementing economic policy, they seemingly want to keep their feet in both the boats hoping to gain support from each demographic; however, can this form of economic populism lead to their downfall?


(Written by Yasashvi Paarakh and Edited by Anoushka Gehani)


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