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Under Modi, a New India Is Growing Faster But Much More Divided

Under Modi, a New India Is Growing Faster But Much More Divided

Under Modi, a New India Is Growing Faster But Much More Divided
A sugarcane farmer rests while waiting to unload his crop outside the Modi Sugar Mills Ltd. sugar factory and distillery in Modinagar, Uttar Pradesh (Photographer: Anindito Mukherjee/Bloomberg)

(Bloomberg) -- Beneath a towering billboard of Prime Minister Narendra Modi’s beaming face, Sainood Khan slaps together dung cakes she uses for cooking fuel. 

Not much has changed for her family since Modi was elected in 2014. Despite his campaign promise to create jobs, she still works as a day laborer, while her husband pedals a rickshaw, together earning just $45 each month. The only improvement in their lives has been a gas canister in their kitchen, provided by the government, that they cannot afford to refill.

Under Modi, a New India Is Growing Faster But Much More Divided

Sainood Khan

Photographer: Anindito Mukherjee/Bloomberg

"Except for the cooking gas, nothing has changed," said Khan, 30, as her four children played barefoot nearby, surrounded by sugarcane fields in Garhi village in rural Uttar Pradesh.

Halfway through his first term as India’s prime minister, Modi and his Bharatiya Janata party have a mixed record in power. Growth is expected to be around 7.7 percent in the year through March and Modi passed a goods and services tax. There have been no major corruption scandals. India has momentum.

And yet for ordinary Indians like Khan, Modi’s successes have little meaning. After stiff opposition from lawmakers and unions, the prime minister abandoned efforts to reform land and labor laws that would dramatically improve the ease of doing business. And there is little employment growth. In early November, a decision to scrap India’s highest denomination bills, in order to fight tax evasion, resulted in chaos as millions lined up at banks to exchange worthless notes. 

To his critics, the polarizing Hindu nationalist leader is also creating a more divided India.  

"There have been major success stories," said Michael Kugelman, a senior associate for South Asia at the Woodrow Wilson International Center for Scholars in Washington, D.C. 

Under Modi, a New India Is Growing Faster But Much More Divided

Television coverage at the BSE of Modi Winning the 2014 election.

Photographer: Vivek Prakash/Bloomberg

"At the same time, some of Modi’s most ballyhooed economic reform proposals fell flat, and the country has experienced very stark communal tensions and violence," he added, referring to attacks on religious minorities and lower castes.

As Modi faces more than a dozen state elections until the general election in 2019, the lack of progress on jobs could impact his Bharatiya Janata Party at the polls, while legislative defeats could setback further efforts to liberalize India’s economy and risk raising tensions in a country of 1.3 billion people.

Jagdish Thakkar, a spokesman in the Prime Minister’s Office, didn’t answer a call or respond to text messages seeking comment on Modi’s reform record.

Gradual Reforms

In the 2014 election, Modi rode a wave of dissatisfaction with corruption and economic stagnation to India’s first parliamentary majority in 30 years. 

With each budget, he liberalized more sectors for foreign investment. The government also introduced a bankruptcy law and created marketing campaigns to re-brand the country, such as the "Make in India" manufacturing push.

"I believe Prime Minister Modi’s track record on reforms is brighter than he is generally given credit," said Richard Rossow, the Wadhwani Chair in U.S. India Policy Studies at the Washington, D.C.-based Center for Strategic and International Studies.

Currency Move

On Nov. 8, Modi gathered his cabinet ministers in the colonial-era sandstone Secretariat Building in New Delhi. Insisting on complete secrecy, Modi told them of his surprise plans to abolish the 500 and 1,000 rupee bank notes, according to two people who were present but declined to be named citing rules. 

Under Modi, a New India Is Growing Faster But Much More Divided

Customers wait to exchange banknotes at an India Post branch in New Delhi.

Photographer: Anindito Mukherjee/Bloomberg

Not one of the ministers asked a question, and all were barred from carrying their mobile phones to prevent leaks before Modi announced his reform on national television, these people said. It was an example of the extraordinary control Modi wields over his ministers.

Yet even as he consolidated power, Modi also had to abandon controversial reforms to laws governing how companies acquire land, as well as hire and fire workers. 

"There was a moment of time -- the first 12 months -- when the government could have acted more boldly," said Milan Vaishnav, a senior associate with the Carnegie Endowment for International Peace. "But they decided that the political costs were too high."

Despite the hype around Modi, India barely budged this year on the World Bank’s ease of doing business rankings, coming 130 out of 190 countries.

‘Anti-National’

Under Modi, there has also been concern India is becoming more divided and less tolerant.

So-called "cow protector" vigilantes have begun attacking those suspected of harming cows, which Hindus consider sacred. Hindu nationalists have attacked and killed Muslims for allegedly eating beef, and even filmed themselves beating Dalits -- formerly known as untouchables -- for allegedly skinning a dead cow, a traditional occupation.

"He’s deeply polarizing," said Harsh Mander, a New Delhi-based human rights activist who advised the previous Congress administration on social programs. "That will be his lasting legacy, leaving India even more divided than it was when he came to power."

Modi, accused of failing to put an end anti-Muslim riots in 2002 when he ruled Gujarat, has remained largely silent on recent violence. "He’s very selective about his silence," said Nilanjan Mukhopadhyay, who wrote a biography of Modi.

He also kept quiet when a BJP politician crusaded against former Reserve Bank of India governor Raghuram Rajan, who warned about growing intolerance. Modi only spoke about the matter after Rajan said he would not seek a second term.

Since Modi was elected, people who question India’s policies have been vilified as "anti-national." During student protests in Delhi, Rajnath Singh, India’s home minister, tweeted that anyone who shouts anti-India slogans "will not be tolerated or spared." The opposition Congress Party’s Rahul Gandhi, Modi’s rival in the 2014 elections, was detained by police twice in one day trying to meet the family of a veteran who killed himself over his pension.

Change on the Ground

It’s clear Modi is far from done with his attempts to change India. 

Observers who doubted Modi had any reforms left were shocked by his move to abolish 86 percent of India’s circulated currency notes. It was typical Modi: Bold and polarizing. Supporters said it was visionary. Critics said the long queues and policy tweaks showed the government lacked a proper implementation plan and risked alienating small traders, who form the party’s base. 

Under Modi, a New India Is Growing Faster But Much More Divided

Building toilets in Chapra village, Haryana.

Photographer: Prashanth Vishwanathan/Bloomberg

Meanwhile, many of Modi’s social initiatives remain distant promises: Villagers such as Khan, in Uttar Pradesh, still do not have the bank accounts or toilets promised by the government. "If someone comes here and tells us, then we’ll apply," Khan says.

Modi, however, remains popular even to those who see little change. Shyamvir Singh, waiting with his sugarcane-laden bullock cart outside a factory in a town called Modinagar in Uttar Pradesh, said he hasn’t seen any benefit from Modi’s election. He doesn’t believe it’s possible to double farmer incomes by 2022, as Modi promised. But that won’t stop him voting for Modi again. 

"Even if I’m not getting benefits, it seems like other people are getting benefits," said Singh, 42.

Before his term ends, Modi must focus on restoring social harmony and ensuring his numerous social initiatives are actually implemented across India, said New Delhi-based political commentator Arati Jerath, who has written about Indian politics for about four decades.

"Time is running out,” Jerath said, noting Modi must create jobs and have a meaningful impact on people’s lives before he starts campaigning for the 2019 election. "These are the biggest challenges. If he is unable to do this, he will be in serious trouble."

--With assistance from Abhijit Roy Chowdhury

To contact the reporters on this story: Iain Marlow in New Delhi at imarlow1@bloomberg.net, Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net.

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Jeanette Rodrigues