Behind Narendra Modi's Pseudo-Nationalist Mask

As Prime Minister Narendra Modi completes seven years at the helm, India is gasping for breath on economic and social fronts.

In May 2014, halfway through Narendra Modi’s first speech as India’s prime minister, I texted my friends that it feels good to have a leader who can speak. After ten years of Manmohan Singh, a technocrat with little oratorical skills, at the helm, it was a cautious embrace of a politician with a dark, divisive past, but promising reforms that would put India firmly on the path of becoming a developed country.

As we approach its seventh anniversary, Modi’s speeches are turning into vacuous drivel as Indians struggle to find hospital beds, oxygen cylinders or life-saving drugs for those who are alive. And the unfortunate ones are seeking firewood and a place to cremate their loved ones for a dignified goodbye. It did not have to be this way.

There is enough blame to go around in the second COVID-19 wave. As an autocratic prime minister, Modi deserves a lion’s share of it, but he had a good start. An infrastructure push that accelerated building highways, new airports, and expanding the train network. A Swachh Bharat mission to end open defecation. Improving electricity generation and distribution to reach every village. Redirecting cooking gas subsidies from the middle class to the needy. Opening bank accounts for every household to boost financial literacy and reduce corruption in disbursing subsidies. Bringing clean drinking water to every household.

While some of the initiatives, like the cooking gas scheme, are faltering due to skyrocketing prices of gas cylinders, others might become force multipliers in the long run, leading to rapid expansion of business activity, savings on health spending, or building human capital. However, as China has shown, such material gains do not always translate into winning the fierce global competition for talent to lead tomorrow’s knowledge-based economy.

In Modi’s India, demonetisation in 2016 was the first red flag. While the avoidable economic destruction it caused is well-documented, the underlying power grab went unaddressed. As the monetary authority, the Reserve Bank of India (RBI) is the sole institution responsible for making currency notes available to the public. According to an insider account, printing of new Rs 2,000 and 500 notes had begun well in advance, but very few people, if any, were aware of the impending scrapping of 86% of notes in circulation. The RBI approved the decision hours before Modi announced it publicly to give it a veneer of institutional propriety, but the damage was done.

People gather at the entry gate of a bank to exchange and deposit their old high denomination banknotes in Jammu, November 15, 2016. Photo: Reuters/Mukesh Gupta

The aftermath proved that the RBI was not prepared for it. None of the stakeholders were consulted or even given enough time to prepare for bringing a $2 trillion economy to a standstill. The judiciary repeatedly gave Modi the benefit of doubt and none of the heads responsible for the chaos rolled. The parliamentary panel’s report on demonetisation never saw the light of day. While killing such reports is not new in India, the policy was emergency-esque in its consequences.

Manmohan Singh’s understated prediction of demonetisation shaving 1.5-2% off the GDP proved to be true. Meanwhile, the pliant media were busy amplifying Modi’s bombastic claims and childish speeches. As is our wont, instead of questioning the ability of one man to not just throw the economy for a toss, but even block access to our own money based on flimsy arguments, we celebrated the arrival of a messiah ushering India into a new era.

Modi’s apologists argue that the disruption due to demonetisation, along with the botched introduction of goods and services tax (GST) in 2017, were growing pains of a formalising economy. Several other Asian economies formalised without such carnage. Worse yet, instead of being rookie mistakes of a new administration, these were harbingers of India’s downward spiral. Modi’s megalomania, destruction of institutions, disdain of experts, and unilateral decision-making have had disastrous consequences on the economic and social fronts.

Also read: The World’s Five Worst Pandemic Leaders

The Indian economy

Jan Dhan Yojana, expansion of MNREGA and direct benefit transfer programmes, expedited digitisation of government records, and the vaunted ‘India Stack,’ a digital platform that can bring financial services to the underserved population, have unleashed innovation in financial technology. Despite widespread privacy concerns, and lack of smartphones or internet access in rural areas, the Indian financial sector is rapidly catching up with the developed world.

While environmental degradation has been a long-standing concern, removing bottlenecks in land purchases for infrastructure projects and streamlining approvals in mining will pay dividends. The Insolvency and Bankruptcy Board of India, if allowed to function without political interference, will accelerate the churn in businesses. Although haphazardly rammed through the parliament, the latest farm laws and labour reforms might make it easier to do business in India. Encouraging public-private partnerships and technology transfer in defense will lead to more innovation. Unfortunately, this list misses the forest for the trees. Modi’s biggest economic failure is the growing atmosphere of uncertainty and fear, which are antithetical to stable growth.

As if the carnage of demonetisation and the botched GST roll-out were not enough, the third blow of the pandemic-related stringent 2020 lockdown, without consulting the business community, hollowed out medium, small and micro enterprises (MSMEs) without serving its purpose of overcoming the pandemic. While the BJP claims that Modi successfully tamed the first wave, there was a massive gap between documented cases and serological surveys after the first wave showing upwards of 50% residents carrying COVID-19 antibodies in some urban areas. Ramped up testing and makeshift hospitals helped. However, India was just lucky in the first wave. Some as-yet-unknown lifestyle and genetic factors, along with a younger population, might have prevented widespread deaths, but the virus was circulating widely, waiting to strike back with deadlier mutations.

Modi’s reluctance to announce another national lockdown during the ongoing second wave is a tacit admission of the steep economic cost India paid for the first one, relegating India to the worst performing economy in the G-20. Unfortunately, while the specter of widespread human death now haunts India, state after state is announcing its own lockdown, making it de facto fourth instance of an economic logjam in seven years.

A migrant worker rides a cart with his family on a highway as they return to their villages, during a 21-day nationwide lockdown to limit the spreading of coronavirus disease (COVID-19), in Ghaziabad, on the outskirts of New Delhi, March 27, 2020. Photo: Reuters/Adnan Abidi

These major disruptions are interspersed with a long list of whimsical policies and U-turns. Constantly changing GST rates, taxes on angel investors, employee stock option policies for entrepreneurs, suggesting that banks invest in startups, half-baked attempts like Atal Innovation Mission to promote entrepreneurship in colleges that cannot even guarantee decent quality education, announcing various taxes and borrowing plans in budgets, only to withdraw them later, failure to stabilise the import/export duties regime, e-commerce policy flip-flops; it goes on and on.

Rather than being an exception, bungling of vaccine manufacturing is the norm in Modi’s era, leading to the ignominy of the Serum Institute of India now exploring other countries to scale up vaccine production. Ever eager to take credit for the success of Indian businesspersons, Modi rarely shares the blame. If anyone dissents, central tax authorities and investigative agencies are unleashed on them, further disincentivising businesses to expand in India. In terms of economic optimism, unemployment, and wage growth, Modi will be lucky if the 2024 numbers are anywhere near the 2014 numbers.

Also read: What Are the Costs of a Delayed Lockdown During Second Wave of COVID-19?

All along, Modi has refused to act in cleaning up the non-performing-assets (NPAs) ridden banking sector or selling public sector entities. The collapses of Yes Bank, infrastructure lender IL&FS, and smaller co-operative banks offered multiple missed opportunities to deal with NPAs. In 2017, the attempted sale of Air India did not find any buyers, leading the government to shelf its privatisation plans. The government has belatedly announced bold action on both fronts, but the second wave of COVID-19 is likely to delay tough decisions.

In election after election since 2014, reducing corruption in welfare schemes has helped Modi buy votes of the poor, but the tap started running dry even before the pandemic. Instead of saving its dividends for the rainy day, the RBI started covering up for the government’s lack of revenues well before early 2020. Modi also started pushing the government’s debt to the Food Corporation of India’s books to lie about his economic mismanagement. And to get re-elected in 2019, he even hid the historically high unemployment numbers.

Through massive interventions in the currency markets, the RBI has managed to keep the Indian economy competitive since the pandemic hit. Of late, it has also announced a major bond-buying programme to support Modi’s exploding borrowing plans for 2021-22. Perhaps the RBI’s substantial foreign currency reserves will prevent the bottom from falling out, but bond investors are finally calling Modi’s bluff. As India stares at stagflation and the RBI is pleading for sympathy towards the government instead of economic fundamentals to convince bond investors to accept lower rates, they are insisting on higher yields.

Ultimately, taxpayers will pay the economic price for Modi’s megalomania. By 2014, after two decades of liberalisation, India was legitimately knocking on the doors of the elite global economic powers club whose members can defy conventional macroeconomic wisdom on debt and deficit. Modi thought that he could avoid unpopular reforms, lie to his voters, and perpetually keep borrowing at low rates. That game might be nearing its end, especially if the US Federal Reserve increases its lending rate soon. And Modi’s economic legacy could include a lost decade or more.

Social atmosphere

In the run-up to the 2014 elections, Modi had eschewed his divisive past and embraced the idea of equitable social development in his campaign rhetoric. Behind the scenes, it was the foot soldiers of Rashtriya Swayamsevak Sangh (RSS) spreading a toxic, Hindu majoritarian ideology that delivered him the parliamentary majority. Middle-class liberals bought into Modi’s reformist economic vision in 2014, but the RSS and its sister organisations had been laying the groundwork for India’s dangerous communal turn for a couple of generations before that.

Prime Minister Narendra Modi along with UP governor Anandiben Patel, chief minister Yogi Adityanath, RSS chief Mohan Bhagwat and others perform Bhoomi Pujan rituals for the construction of the Ram Mandir, at Ayodhya on August 5. Photo: PTI

Unlike the early economic gains, the contradiction between what Modi had promised on the social front and the ground realities started appearing quite early in his first term. Through his strategic silence on incidents of Hindu-Muslim confrontations, lynching incidents of minorities, and his BJP colleagues using incendiary rhetoric, Modi tried to pretend that they were minor distractions to his grand plans of nation building.

On one hand, Skill India, Make in India, Start-up India, Smart Cities and a slew of other schemes were launched to enhance workforce efficiency and build a modern economy. On the other, BJP launched culture wars on college campuses. Instead of pouring precious little funds into upgrading schools and R&D infrastructure, developing scientific temper, and building on successes of previous administrations in the technology world, Modi was interested in taking on leftist hegemony in academic institutions.

Also read: The Limits of Hindutva’s Homegrown Authoritarianism

While right-wing lynch mobs and anti-Romeo squads were operating with impunity, frivolous sedition cases and investigations under the stringent Unlawful Activities Prevention Act (UAPA) were initiated against students or journalists espousing opposing ideology or refusing to fall in line with religious majoritarianism. Modi’s ministers in charge of education, science and technology, and health started touting unproven theories and ideas, some rooted in ancient Hindu thought, at scientific conferences and international forums.

As the various human resource development schemes started faltering, the majoritarian Hindutva rhetoric became more and more shrill. Modi’s home ministry admitted in the parliament that there is no evidence of “love jihad”, the idea concocted by the right wing that Muslim men are marrying innocent Hindu girls to convert them to Islam. And yet, state after state ruled by the BJP started enacting laws to prevent it. The judiciary and law enforcement officials, already burdened with millions of pending cases and lack of resources, were forced to waste their time on political witch-hunts. Indian and foreign students were expelled for protesting government policies. And the BJP used its social media propaganda machine to constantly feed anti-Western narratives and Hindu victimhood.

Further decentralisation of education and attracting global talent took a back seat. Dubious science, quackery, and untested ancient Hindu practices were resurrected. Manufacturing sector started declining along with the overall economy. With widespread unemployment, the BJP doubled down on pseudo-nationalism and Hindutva to keep the youth engaged. Without doing any of the hard work required to build a modern economy, Modi started touting India as the Vishwaguru, a world leader, through photo-ops and selling achievements of previous administrations as his own.

As a result, despite India having one of the youngest populations in the world that is fast adopting technology, a vast majority of the youth lacks the understanding of the basic building blocks of a knowledge-based economy. While there are some bright spots in the start-up world, including a growing number of unicorns, India still lags in building unique products relevant to the world, even in areas like information technology that require minimal resources. India is nowhere on the map in resource-heavy technology development. Modi’s economic destruction will preclude any major government investment in R&D. And his social policies will scare away global talent, condemning India to a predominantly low-skill and low efficiency economy for another generation.

Amid this doom and gloom, all is not lost. If Modi removes his pseudo-nationalist mask, owns up to his failures, and commits to course-correction, he can reverse the economic setbacks. Sadly, it will take much longer to put the Hindu majoritarian genie back in the bottle to become a tolerant, liberal society again. Indians pressurising Modi to hold press conferences and holding him accountable would be a good start.

Seven years on, Modi is still speaking, but the rest of the world has unmasked him. They are waiting for the Indian media and voters to call his bluff.

Mauktik Kulkarni is an engineer, neuroscientist, entrepreneur, author and a filmmaker. He is the author of A Ghost of Che and Packing Up Without Looking Back.