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When PM becomes CEO

Under Modi, subject is changing to economy. His challenge will be to rein in Hindutva hardliners

Written by Walter Andersen |
Updated: July 15, 2014 7:42:32 am
Modi has indicated great admiration for four other countries whose leaders have similar CEO styles: China, Japan, South Korea and Singapore. Modi has indicated great admiration for four other countries whose leaders have similar CEO styles: China, Japan, South Korea and Singapore.

When reviewing Prime Minister Narendra Modi’s six weeks in office, the analogy that seems most appropriate is that of a chief executive officer of a large corporation who knows that his future depends on growing the enterprise while satisfying the sometimes conflicting expectations of its chief stockholders. The prime minister presides over what he and others hope will be India Inc. His budget signalled a focus on economic growth. Indeed, the rush of money from global investors to India in the past several months has pushed the Sensex to a record high above 26,000.

Modi has indicated great admiration for four other countries whose leaders have similar CEO styles: China, Japan, South Korea and Singapore. The leaders of Japan and China were quick to respond very favourably to his electoral success, in part because they saw a new leader who is committed, above all, to economic development and growth, and could thus provide opportunities for them to deepen the bilateral relationship.

Modi’s task as India’s CEO in pursuit of a similar growth model is helped by the BJP’s strong parliamentary majority, his unchallenged control of the BJP and a public that seems prepared to give him a lot of slack, at least for now, This gives him some initial room to make bold decisions early in his tenure.

Fiscal discipline has been a major theme in the early days of Modi’s tenure. Finance Minister Arun Jaitley said that the Modi government will avoid “mindless populism”, and railway fares and freight rates have been increased to raise the money needed to cover the costs of operations, maintenance and expansion. The government responded to protests by partially rolling back the fare increase, suggesting that it will not let economic reforms get too far in front of public opinion.

On the primary task of growing the economy, there are, however, policy differences within his ranks. A large part of the Sangh Parivar supports economic self-sufficiency, while Modi’s own record as chief minister in Gujarat suggests that he favours increased foreign investment. This dilemma comes out clearly on the topic of foreign investment in the multibrand retail sector. His initial opposition is likely shaped by the resistance to any opening up of this area by one of the BJP’s core constituencies, the small “mom and pop” retail store owners.

Now in power, he may modify this earlier stand on foreign investment in retail. One area of reform that has been discussed is changes to investment policy in the foreign online retail sector. India currently allows 100 per cent FDI in business to business (B2B) e-commerce but not business to consumer (B2C) e-commerce. Jaitley’s budget speech signalled that the government plans to open up e-commerce to foreign investment.

In pursuit of economic growth, the prime minister will almost certainly have to address the legal disincentives for investment caused by outdated labour and land legislation. However, changes of policy in these areas, too, are deeply controversial, as the BJP’s own labour affiliate, among others, is likely to oppose changes in the 1950s-era labour laws. Nonetheless, Modi has recently indicated that his government plans to revise the new land acquisition law and undertake reforms of India’s labour laws. The BJP government of Vasundhara Raje in Rajasthan has already announced very significant changes in the state’s labour laws in ways that would encourage business investments.

As the prime minister pushes to get the economy moving to create the jobs demanded by the young voters who turned to the BJP, there is likely to be a temptation to bypass environmental issues and other regulatory impediments to speed up the decision-making process. While some of these changes are necessary for efficiency, fears that his government will ignore the environment, worker safety and education legitimately fuel some of the early criticism of his government.

However, the prime minister is operating in a political world where he needs to convince the public that his policy model is producing the results he promised and that young voters expect. This objective requires a close reading of the public’s reaction to his policy moves. To promote feedback, Modi has been a strong advocate for using social platforms such as Twitter and Facebook as a means to improve communications between people and governments.

As the country’s CEO, Modi’s goal of rapid economic growth creates strong incentives for social stability, both internally and externally. Throughout the campaign, Modi used a new language, possibly signalling a redefinition and orientation of Hindu nationalism that is more inclusive, by focusing on making India more prosperous and secure in ways that improve the lives of Hindus, Muslims, Christians and everyone else.

Modi caused a stir during the campaign when he said that his first thought is toilets before temples. His language may be influenced by the RSS’s emphasis on karmayoga, referring to its notion of selfless service to society. If Modi continues to focus on an inclusive message of the benefits of development and growth for all Indians and is successful in using his significant influence in the Sangh Parivar to change its views, he may be able to orient the BJP in ways that resemble the moderately conservative centre-right European Christian Democratic parties, which espouse Christian ethics while advocating for broadly inclusive policies.

For now, a critical challenge going forward will be to keep the Hindutva hardliners under control. While Modi has generally avoided wading into sensitive topics, the government’s directive to give preference to Hindi on social media created immediate controversy, forcing the administration to clarify that all Indian languages are important.

The recent elevation of Amit Shah as BJP president, who is both deeply loyal to Modi and has a successful record in delivering electoral campaigns, is clearly designed to strengthen Modi’s hold on the party. However, in light of the controversy arising over remarks by Shah during the recent campaign, Modi will need to ensure that future electoral tactics fit a model of national stability and inclusiveness that supports an atmosphere for development and growth.

While not a signature component of his electoral campaign, Modi has rapidly signalled that external relations with India’s neighbours would garner executive attention. Modi’s decision to invite the leaders of the Saarc to his inauguration and to make Bhutan his first foreign destination indicates that good external relations and, in particular, positioning India to exercise influence in regional diplomacy and economic cooperation, is a top priority. His foreign policy is likely to very explicitly link India’s geo-strategic interests with its economic policies.

The prime minister has accepted invitations to visit Japan, China and the US, countries of significant economic and security importance. His external affairs minister also has a busy travel schedule to further the same goals. In Sushma Swaraj’s June 25 visit to Bangladesh, she suggested to both countries the economic advantages of Bangladesh serving as a link between India and Southeast Asia. Operating from the perspective of a CEO, Prime Minister Modi is very likely to reorient the task of Indian embassies abroad to shift their focus from political to economic issues.

Modi’s challenge will be to balance the economic perspective of a CEO with the political compulsions of a politician. His skills at juggling these priorities will become most apparent after the current honeymoon period ends, which may well coincide with the debates that arise from the policies proposed in the current budget.

Co-authored by Allison Berland.
Andersen is director, South Asia Studies Programme, School of Advanced International Studies, Johns Hopkins University, Washington, and co-author of ‘The Brotherhood in Saffron: The Rashtriya Swayamsevak Sangh and Hindu Revivalism’. Berland is currently a post-doctoral research fellow at the programme.

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