Will India's Narendra Modi be a reformer?

BBC's Zubair Ahmed: 'Electric atmosphere' as Narendra Modi sworn in'

India's prime minister-elect Narendra Modi has been compared to Deng Xiaoping, Margaret Thatcher, Ronald Reagan, Shinzo Abe, Tayyip Erdogan and Mahinda Rajapaksa.

Commentators have variously described him as assertive, dynamic, authoritarian and nationalist.

Many believe he's a genuine economic reformer. Others worry about his - and his BJP's - hard-line Hindu credentials and wonder whether it poses a threat to the idea of a pluralist India.

Mr Modi campaigned in the recent election on his record of making Gujarat one of India's fastest growing and business friendly states, and his on own reputation as a tough administrator and staunch Hindu nationalist. In return, voters rewarded him and his BJP with an unprecedented landslide win.

'Change agent'

Mr Modi's supporters believe he is the right man to pull India out of the quagmire of low growth, high inflation, joblessness and slack governance. One commentator believes that Mr Modi may well have "inaugurated India's second republic" as his record in governance makes him an "economic change-agent, not an economic waster".

Mr Modi inherits a sluggish economy. Growth has slowed to under 5%. Retail inflation, driven by food prices, continues to be high at over 8%. Manufacturing is subdued and exports are flat. Jobs have dried up in a country which needs to create 12 million a year to keep pace with its burgeoning population.

On other fronts, however, things appear to have improved.

The rupee has firmed to 58 per dollar, its highest in nearly a year. Reining in gold imports and a modest pick-up in exports have helped tame the current account deficit - likely to narrow to 2.3% this fiscal year, down from a high of 4.9%. Foreign exchange reserves - at over $300bn (£179bn) - are reasonably healthy.

But such improvements hide deeper structural deficiencies.

Analysts say India urgently needs to build more roads and ports, boost its electricity supply, slash wasteful subsidies, reform archaic labour laws and clean up debt-saddled banks. Since its convoluted land acquisition law makes it difficult for industry to buy land, the government needs to free up vast tracts of idle land locked up in ailing state-owned enterprises for industry. It needs to cut red tape and regulations that scare away investment: India ranks a miserable 134 among 185 nations in the World Bank's Ease of Doing Business survey.

High-rise residential buildings in Mumbai India needs millions of new low cost homes

The BJP's 42-page manifesto has Mr Modi's unmistakable stamp. It is packed with promises which echo Mr Modi's obsession with infrastructure building: bullet trains, smart cities, linking rivers, more engineering and medicine schools, low cost homes, cleaning up filthy rivers.

More contentious commitments which reflect Mr Modi and his party's concession to the hard-line Hindu constituency - building a temple on a disputed site in Ayodhya and ending a personal law given to different religions and supporting a common civil code for all Indians - appear in a few lines on page 41.

Mr Modi is certainly pro-business. But is he pro-free market at heart? Will he be able to, as political scientist Ashutosh Varshney wonders, "stabilise economic development as a master narrative of India's politics, displacing religion and caste"?

On the stump, Mr Modi repeatedly spoke about "maximum governance and minimum government", without providing much detail about what he meant. To be sure, it is easier said than done: diminishing government and making it more accountable will require considerable institutional reform in the gargantuan and stubborn Indian bureaucracy, which has been described as the "worst in Asia".

What Mr Modi can - and will possibly do - his aides suggest is to pick "low hanging fruit" and rev up investment.

One of the main things on his agenda, they say, will be to kick-start some of the 250 stalled infrastructure projects - mainly in coal, steel, electricity, petroleum and roads - involving an investment of a mammoth $217bn (£129bn).

"The main challenge before the new government," BJP leader Arun Jaitley, who is close to Mr Modi, told me during the campaign, would be to "work towards redeveloping confidence in Indian economy". The "low hanging fruit" he mentioned included boosting infrastructure, real estate, tourism, skills development and low-cost manufacturing.

Federal constraints

Economist Vivek Dehejia believes that some administrative reforms coupled with a "few headline-grabbing infrastructure projects, should signal to corporate houses and investors - both domestic and foreign - that India is open for business again".

Mr Modi's "comparison to Margaret Thatcher, for example, is a bit overblown," Mr Dehejia told me. "However, it is always possible that the strength of the mandate, and the presence of pro-market advisers close to Mr Modi could tip the balance towards a stronger economic reform agenda, rather than a more ideologically 'neutral' emphasis on good governance."

Commentator Ashok Malik, who has written extensively on Mr Modi, says he will be "as rightwing as possible for a mainstream electable political leader". That means, he says, Mr Modi will strive to make India's bloated and lumbering state more "transparent and efficient" and make it more of a facilitator rather than an impediment. What it also means is he cannot massively reduce or radically overhaul India's big welfare schemes, which, having improved lives in the poorest regions, are also shot with corruption.

India jobless workers India needs to create millions of jobs every year

Then there are the constraints of India's federal polity.

Mr Modi will need to depend on a heavy dose of bipartisanship to push through key laws in a parliament which his party has been accused of stalling in the past - top of the list has to be the uniform goods and services tax which could fetch India nearly $500bn (£298bn) in revenues and is more than three years behind schedule.

The BJP commands the lower house of parliament but it holds only 26% of the seats in the upper house, which could make it more difficult to push legislation through. Much power also lies with India's states. "Prime Minister Modi will expose a paradoxical tension between his mandate and mission," says economist Arvind Subramanium. "His electoral appeal is based on his ability to wield power, ruthlessly if necessary. His success in governing the economy will depend on coming to grips with, and making the best of, highly circumscribed power."

Nobody quite knows Mr Modi's mind on reforms. What we do know is that he's fascinated with Asia's tiger economies.

"I try to understand Singapore, Malaysia, Vietnam, South Korea - and also China and Japan. I consider that China has great strength in its manufacturing - and so I have strengthened our manufacturing strength," he told his biographer Nilanjan Mukhopadhyay when he was chief minister of Gujarat.

But when Andy Marino, Mr Modi's other biographer, asked him about what would happen to India's soul if it rushed ahead economically, he replied: "Modernisation without Westernisation. It certainly sounds better than Westernisation without modernisation, of which India already has a surfeit. But what does it really mean?" What, indeed? Only time will tell whether Mr Modi will reform or perish.

Soutik Biswas, Delhi correspondent Article written by Soutik Biswas Soutik Biswas Delhi correspondent

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