IRFAN NOORUDDIN
WASHINGTON, DC – India is having a moment. This summer, Indian Prime Minister Narendra Modi was treated to a state visit in America and then hosted as the prize guest at France’s Bastille Day celebrations. To Modi’s many fans, this high-profile courting was an irrefutable confirmation of India’s arrival on the world stage. Yet they would do well to ask why India’s star suddenly seems to be rising.Is it because of India’s own accomplishments, or is it more a reflection of China’s rise as a power that America and Europe now must confront?
Hope is a powerful drug. What we saw this summer was a hasty effort by Western governments to conjure up their own preferred version of India – one that they can count on in a global order that China is rapidly reshaping. In reality, India’s moment has already passed. The preceding ten years will eventually be rued as a lost decade in which public-relations fireworks outstripped public-policy acumen.
After Modi came to power in 2014, the economic momentum that he inherited from his predecessor, Manmohan Singh, succumbed to a raft of ill-conceived policies (remember demonetization?), including several – such as farm bills and a data-localization scheme – that he was eventually forced to reverse. And on the political front, he has eroded Indian democracy and polarized the country by abrogating Jammu and Kashmir’s statehood and turning it into a militarized territory administered by India; by advocating a Citizenship Amendment Act that discriminates against Muslims; and by using tax enforcement as a cudgel against independentjournalists and civil society.
All is not lost, but reversing this slide will require more than platitudes and jingoism-fueled optimism on the part of the West. India must exceed expectations in four key domains if it is to achieve its goals, and that will require a shake-up of a central government that has been allergic to criticism and impervious to advice.
SQUANDERED POTENTIAL
By some estimates, India is already the world’s most populous country. But while most of its people are young, its population is no longer as young as it was when economists first started touting its demographic dividend. India’s middle class – which may be as large as 350 million people, depending on the threshold used – makes its consumer market too big to ignore. But its manufacturing sector has lagged, despite the government’s introduction of large incentives for foreign companies to move their production facilities to India (ideally into Gujarat or Uttar Pradesh). Although US President Joe Biden’s administration leaned on American multinationals to make big investment announcements as part of Modi’s state visit in June, enthusiasm was muted.
The price of Modi’s economic-policy failures are high. As matters stand, there simply are not enough new jobs being created in retail and white-collar service sectors to absorb the millions of young people entering the workforce each year. This large army of unemployed and underemployed people will be a potent political force, especially as income and wealth inequality grow.
India’s economic challenges are encapsulated in its contradictory approach to the digital economy. On one hand, India has made its investment in digital public infrastructure (DPI) a centerpiece of its G20 presidency, showcasing its world-leading unique-ID system (Aadhar) and the technology stack that has been built on it. While the Aadhar system preceded Modi’s premiership, his government has pushed to expand and proselytize it.
On the other hand, Indian policy inclinations in this domain have run afoul of common sense, reflecting antipathy for the private sector and for international private investors, in particular. For example, the government has leveraged India’s massive market to try to coerce large multinationals into taking a loss on DPI projects, such as by requiring a zero merchant-discount rate for credit-card transactions in order to prop up its preferred Unified Payments Interface.
More broadly, India under Modi has failed to drive growth in manufacturing and capital investment. The Reserve Bank of India estimates that services and the manufacturing sector would need to grow at 13% per year for the next 25 years for India to achieve a $13,205 per capita GDP. It is nowhere close.
This anti-business approach, along with broader resistance to criticism and feedback, bodes poorly for the West’s own plans to rely on India for supply-chain resilience. Notwithstanding the relatively higher recent GDP growth figures, Modi has failed to turn India into a major global economic hub and destination for foreign investment.
MAJORITARIANISM VERSUS DEMOCRACY
In the years immediately following its independence in 1947, India was a beacon of democracy for the Global South. Under Modi, however, it is now regarded as an “electoral autocracy” or “illiberal democracy.” While Western suitors sign on to joint statements professing their shared values with India, Modi’s government continues to attack civil-society organizations, press freedoms, and judicial independence.
Yes, India’s elections remain free and fair; but the government’s introduction of new political funding mechanisms (“electoral bonds”) has opened the floodgates of dark money. Moreover, the terms on which elections are waged have become increasingly polarizing, pitting religious majoritarianism against constitutional commitments to secularism and pluralism. Throughout the country, attacks on Muslims and lower-caste communities are on the rise, because extremists do not expect to face any accountability for fomenting violence. Such majoritarian impunity is risky business in a country with a long, sordid history of deadly riots and pogroms.
As we enter another campaign season – with five state elections in the next six months, and a national election scheduled for late spring 2024 – these problems will only grow. Modi’s Hindu-nationalist Bharatiya Janata Party and its network of social organizations (the so-called Sangh Parivar) will depend on the polarization playbook. We can expect to hear little about economic-policy accomplishments, and much more about the need for a “Uniform Civil Code” – a dog-whistle for those harboring anti-minority prejudices.
Meanwhile, Western policymakers are watching India’s democratic backsliding with studied silence, clinging to the hope that talk of “shared values” will provide sufficient cover for them to embrace an illiberal government in the name of countering China. But such rhetoric is unhelpful. If the West believes that a closer relationship with India will help it mount a coherent response to Chinese power, so be it. Why squander your own credibility by claiming that it has anything to do with democratic values?
HARD QUESTIONS
For all its policy failings and grounds for pessimism about its prospects for becoming a democratic and economic powerhouse, there is no denying that India is and will remain a major player on the world stage. The question is how it will choose to play its hand. While Western leaders hope their charm offensive will eventually bear fruit, they should remember that India is a traditionally reluctant and obstinate partner with a longstanding allergy to formal alliances.
Historically, this fierce independence was rooted in the Cold War principle of non-alignment, whereby India rejected the idea that it must choose between the Soviet Union and America. Now, Indian leaders have rebranded this position as “multi-alignment,” which captures the realist notion that India reserves its right to work with any country it chooses. The West learned this the hard way when Modi’s government refused even to condemn Russia’s full-scale invasion of Ukraine, let alone participate in the Western sanctions regime.
India’s resistance to joining the Western camp (or any other) is not going to change. This year, it has been perfectly willing to allow multiple rounds of high-level G20 negotiations to conclude without any joint communiqués, simply because it refused to adopt the West’s favored language about the war in Ukraine.
While Western governments continue to believe that the Chinese threat will force India eventually to admit that it needs them as much or more than they need it, India may yet have the last laugh. It is doubling down on its role in the Shanghai Cooperation Organization – which is now extending membership to Iran – and its trade with China is growing.Indeed, Indian policymakers well know that decoupling from China is a non-starter. Though India will be happy to purchase more military hardware from the West, it would be folly for Western militaries to count on it in the event of a kinetic conflict in the Indo-Pacific.
India may be having a moment; but the fact remains that this century will be shaped by the rise of Chinese power. A decade of misgovernance and majoritarian politics has sapped the economic momentum that India had in the 1990s and 2000s, depriving it of the means to serve as a greater counterweight to China. Rather than blindly courting India, Western strategists should consider what will happen if the ethnic conflict that tore Manipur apart this summer spreads to other states.
The mistake we risk making with today’s India stems from hubris – an age-old strategic weakness. The West’s conviction that it is on the side of the angels often leads it to assume the same about its partners. In India’s case, this tendency produces endless excuses for the country’s democratic backsliding and geopolitical ambivalence. Yet it is not clear that the payoff will be worth it. Any partner who must be constantly handled with kid gloves is unlikely to be there for you when it really counts.
The West should urgently rethink its approach. What does India’s approach to the private sector and international investors say about its ability to contribute to supply-chain resilience? What risks does its democratic backsliding pose to America’s credibility and broader China-containment strategy? How does India understand its responsibilities within the liberal international order? We might not like the answers we get, but at least we would be asking the right questions.
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