The Age of Aspiration: Power, Wealth, and Conflict

Dilip Hiro
New York and London: The New Press
2015
ISBN: 1620971305
Introduction, Pages 7 to 10

After 1991

The New Industrial Policy, announced in July 1991 in Delhi, drastically reduced the license-permit-quota regime, the so-called “License Raj.” It abolished import quotas, slashed tariffs from over 100 percent to 25-36 percent, and ended industrial licensing except for enterprises in defense and national strategy. It limited public-sector monopoly only to security, national strategy, nuclear power, and railways. In the service sector, it allowed private companies in banking, insurance, telecommunications, and air travel. Foreign companies were allowed equity up to 51 percent (up from 40 percent) in thirty-four industries. During the five-year tenure of the Narasimha Rao government (1991-96), the average annual GDP expansion was 6.7 percent. To distinguish itself from the Congress Party, the Bharatiya Janata Party (BJP) stressed swadeshi (Hindi: made domestically), or self-reliance, in the economic sphere. This chimed well with the followers of BJP who supported the party’s earlier call for Hinduization – popularly called Hindutva – in the cultural sense. In the 1998 general election, it emerged as the largest group and formed a coalition government that lasted only a year.

It was only after the 1999 parliamentary poll that the BJP was able to lead a stable coalition cabinet. It underscored its commitment to the new economic policy and globalization by cutting tariffs further, lowering barriers to foreign direct investment, and redefining swadeshi as “competing effectively in the global economy.” This sophistry was meant to mask the fact that the predominantly Hindu business houses had started to fund the BJP as a serious alternative to the Congress Party when they noticed its surging popularity among Hindus, which it gained by playing up the highly charged religious card. The party had in return transformed itself into an advocate of market economy. Earlier, the Foreign Exchange Management Act of 1999 had allowed freer movement of capital in and out of India. To expedite privatization, the BJP-led government established the Ministry of Disinvestment.

India’s involvement in the information and communication technology industry provided glittering material for glossy newsmagazines in the United States that were keen to applaud the rise of the world’s largest democracy as it accelerated its drive into a market economy and globalization. At home, the (minority) English-language newspapers and magazines went into over-drive, declaring India an “Information Superpower” deserving some kind of global status. Such claims flew in the face of the following fact: the tech industry provided direct and indirect employment to less than 1 percent of the national workforce of 487 million people, in a country where half the households lacked electricity and only 5 percent had a landline telephone connection.8

All the same, the GDP expansion in fiscal year 2003 broke out of the traditional 5 to 6 percent band to hit 8.2 percent.9  The BJP coined a beguiling phrase: “India Shining!” Sure of winning a fresh mandate from voters, it brought the general election forward by several months, to April–May 2004.

BJP leaders had not foreseen that the opposition Congress Party, led by its freshly confident president, Sonia Gandhi, would adopt the leftist parties’ critique. She argued that the benefits of the improved growth rates were being skimmed off by the top 5 percent of the population, leaving 70 percent of Indians stagnating, surviving on less than $2 a day. The election gave the have-nots a chance to register their protest. They did.

They favored the opposition Congress Party, which emerged as the largest group but lacked a majority. Backed by the fifty-nine-member Communist-led Left Front, which forewent cabinet posts, the Congress Party led a coalition government under the title of the United Progressive Alliance (UPA), with Manmohan Singh as the prime minister…. 

The number of billionaires shot up from twenty-seven in 2008 to fifty-six in 2013. Likewise, there was an upsurge in the number of millionaires, up from 193,000 in 2009 to 248,000 in 2013. According to a study by the London-based Wealthlnsight, a financial magazine that tracks the world’s rich, India’s high-net-worth individuals – those possessing assets worth $1 million or more – own nearly 65 percent of the nation’s $1.3 trillion in individual wealth. This is more than twice the rate for the rest of the world.10

The increased concentration of wealth accentuated the problem of corruption in politics and government, resulting in scams of ever greater proportions in the public as well as private sectors. The ballooning of graft was related to the ease with which money could be transferred across borders thanks to the globalization of finance and the exponential rise in the use of the informal worldwide hawala system. A spate of mega-scams came to light during Singh’s second administration and created popular anger and disgust. While the corruption scandals received massive publicity, what went largely unnoticed was the overall result of nearly two decades of the new economic policy. The actual number of Indians below the poverty line rose by 5 percent. While India accounted for one-sixth of the human race, it was home to a quarter of the global poor.11

In the domestic political arena, a spate of colossal corruption scams pro-vided high-octane fuel to the opposition BJP, which launched a full-frontal assault on the government. By dithering on the introduction of a bill for an anti-corruption ombudsman, called the Lokpal, the Singh cabinet made itself doubly vulnerable. The decline in annual GDP growth to 5 percent in fiscal year 2012 (ending in March 2013), equivalent to half of the figure attained three years earlier, added to its woes. The standing of both the Congress Party and its regional ally, the Dravida Munnetra Kazhagham, plunged precipitously.

The BJP leadership combined its attacks on the government with highlights of their economic scheme, called the Gujarat Model, named after the state ruled by BJP Chief Minister Narendra Modi since 2001. The Gujarat Model was a compendium of Modi’s policies and his governance style, which bordered on authoritarianism. But its exact definition was hard to fathom.

Modi’s Controversial Rise

The Gujarat Model had its admirers and detractors. The former argued that the Modi government was business friendly but did not promote crony capitalism. Though Modi was all for private enterprise, he was not an out-and-out pro-marketeer. Nonetheless, all agreed that he was an ardent believer in economic freedom, which meant minimal state regulation, if any. He was also opposed to providing subsidies for food and fuel. While all governments in Gujarat, irrespective of the party label, had encouraged investment and industrial development, Modi had led the campaign for investment vigorously from the front. Under his watch, the state had enjoyed a consistent GDP expansion rate of almost 9 percent. And, given the average annual agricultural growth of 8 percent (a figure disputed by nonpartisan experts), his supporters claimed that the Gujarat Model was pro-poor.12

Modi’s critics emphasized the favors that he had bestowed on such corporate barons as Ratan Tata and Gautam Adani. To encourage Tata Motors to relocate its Nano plant from West Bengal to Gujarat in 2008, the Modi government lent the company Rs 95.7 billion at 0.1 percent interest on its own investment of Rs 29 billion, to be repaid in monthly installments over twenty years.13 In 2005, it began extending to the Adani Group thirty-year renewable leases on twenty-eight square miles (7,350 hectares) of land at 14 to 45(t per square meter, to be used for the Adani Port and Special Economic Zone, the largest Special Economic Zone in India. Adani then subleased parts of this land to other companies for as much as $11 per square meter.14 In addition, the Modi government bent all the rules to award the Adani Group a lucrative contract for supplying electricity, resulting in an estimated loss of Rs 23.63 billion over twenty-five years to the public treasury.15 As for helping the needy, among India’s large states, Gujarat had the worst record in implementing the National Rural Employment Guarantee Act.16

The 2014 poll shaped up as a contest between the Congress Party’s vice president, Rahul Gandhi, the Cambridge University – educated son of Rajiv and Sonia, and Modi, the prime ministerial nominee of the BJP. A management consultant by training, the forty-three-year-old Gandhi, a scion of the Nehru-Gandhi family, lacked administrative and organizational skills. In stark comparison, Modi, the son of a tea seller in Vadnagar, a small town in North Gujarat, was a self-made politician who had been the chief minister of Gujarat since 2001….

Apparently, BJP leaders, advised by some of the best Indian brains in public relations, made an astute use of the billions of rupees that filled their party’s coffers. By outspending their Congress rivals by an estimated 4:1 ration, they achieved an end-result variously described as a political tsunami, a peaceful revolution, and a democratic asteroid.

End Notes

8 Dilip Hiro, After Empire: The Birth of a Multipolar World (New York: Nation Books), 197.
9 “India Logs 8.2% Growth Rate in 2003-04,” Rediff.com, June 30, 2004, http:// www.rediff.com/money/2004/jun/30gdp.htm.
10 Septarishi Dutta, “India’s Millionaire Tribe Set to Soar,” India Real Time blog, Wall Street Journal, May 29, 2014, http://blogs.wsj.com/indiarealtime/2014/05/29 /indias-millionaire-tribe-is-set-to-soar/.
11 Randeep Ramesh, “British Minister Defends L’825 Million Aid,” The Guardian, November 19, 2008, http://www.theguardian.com/world/2008/nov/19/britain-aid-to -india-825; and Somini Sengupta, “India Faces a Paradox in Its Ill-fed Children,” International Herald Tribune, March 11, 2009.
12 Vivian Fernandes, “Gujarat Model or Modi Model? New Book Says There Is Only a Modi Style of Execution,” First Post, April 11, 2014, http://firstbiz.firstpost.com /economy/gujarat-model-modi-model-new-book-says-modi-style-execution-81762 .html.
13 FE Bureaus, “Modi Orders Inquiry into Nano MoU Note,” Financial Express, November 11, 2008, http://archive.financialexpress.com/news/modi-orders-inquiry-into -nano-mou-note/383964/.
14 Megha Bahree, “Indian Billionaire Gautam Adani Finds a Savior in the Modi Govt,” Forbes (Mumbai), July 17, 2014,http://www.forbes.com/sites/meghabahree /2014/07/17/adani-finds-a-savior-in-the-modi-govt/”> http://www.forbes.com/sites/meghabahree /2014/07/17/adani-finds-a-savior-in-the-modi-govt/.
15 Rajeev Kumar, “Adani-Modi Nexus to Cost 23,625 Cr,” Gulail, September 9, 2013, http://gulail.com/adani-modi-nexus-to-result-in-loss-of-rs-23625-crore-to -gujarat-in-one-deal-alone/.
16 Rohini Hensman, “Gujarat Model of Development: What Would It Do to the Indian Economy?,” Countercurrents.org, March 19, 2014, http://www.countercurrents .org/rh190314.htm.

Read a review of the book, first published in India by HarperCollins Publishers India in 2014 as Indians in a Globalizing World. 

© 2014, 2015 by Dilip Hiro

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