The prime minister of India, Narendra Modi, is now facing stiff headwinds — accused by critics that he has retreated from his bold platform of economic reform by backing off on the Government of India’s use of eminent domain to promote industrial development.
One is reminded of the ancient world, as described in Homer’s The Odyssey. In Greek mythology, there were thought to be two hazards that menaced sailors which were believed to lie between Sicily and the Italian mainland: Scylla, an imposing monster with many heads, and Charybdis, an ominous whirlpool. Avoiding one meant venturing too close to the other.
The current dilemma facing Modi is really not so different. There is the need for inclusivity and tranquility among Muslims, low-income women, and low caste and tribal populations. There is also the need to create 10 million jobs per year (with some estimates even higher), principally in the manufacturing sector — to absorb unskilled workers from the agricultural sector.
The pace of urbanization is a wild card in India’s long-term development. With an estimated one-third of its more than 1.3 billion population estimated to be urban, India is much less urbanized than countries such as China, which is at about 55%, and Mexico and Brazil, which are at nearly 80% or more. In a somewhat dated but nonetheless credible estimate, McKinsey & Company have indicated that India’s urban population will reach 590 million by 2030. This unrelenting force seeking employment will put massive pressure on the Indian economy, urban planning, and infrastructure.
To sustain these new labor force entrants, India needs a far more robust manufacturing sector, which presently employs only 20% of the country’s work force amounting to 24% of GDP. It is well recognized that IT and the call center enterprises do not have the scale for such sustained job creation.
Of late, and in an effort to promote industrialization, Modi had attempted to relax constraints upon the government’s use of eminent domain to appropriate land for development. While this effort was supported by the Indian business sector, the backlash from within his own Bharatiya Janata Party and from the opposition has been fierce, causing the prime minister to hesitate and then be criticized for lacking the decisiveness and implementation skills that have been part of his political résumé.
While the call for industrialization has economic and theoretical appeal, the cost can be dispossessed rural populations as well as resentment about low compensation for such land. A cause for concern is the rural Naxalite movement, a Maoist style revolt with antecedents in West Bengal since the 1960s. It is a dangerous force that is fueled by antagonism toward the Government of India, estimated to have penetrated about one-third of India’s districts, mainly in areas having coal deposits and other strategic minerals. The principle of eminent domain to promote industrial development could strengthen the appeal of the Naxalites and their message that rural India is disenfranchised and persecuted by government.
Narendra Modi was elected on a record as an experienced, charismatic leader able to “get it done,” as he demonstrated with success in industrializing the state of Gujarat where he was chief minister from 2001 to 2014. Long on diagnostics but short on implementation, India has been ready for such a leader. But clearly, running a state in western India is not the same as running the country, which has virtually infinite complexity of caste, region, language, religion, ethnic groups, and cultural traditions.
Now in his second year in office as prime minister, Modi must address the other reality: the need to prioritize. India has a tradition of vicious factionalism that can impede even the most intelligent of policies. Besides emphasizing industrial development, India’s relations with Pakistan, the United States, and China must occupy his time, as well as the social priorities of education, public health and the development of infrastructure — along with delivering subsidies to the poor through a new and successful technology platform. Further, Indian agriculture is currently maxed out and in need of a second Green Revolution to increase productivity and farm income. And without relaxation of the Nuclear Liability Act of 2010, which has prevented U.S. companies from constructing civilian nuclear reactors, the largely coal-fired power sector will receive no relief.
Mr. Modi is, among various things, the symbol of entrepreneurship and a liberalizing economy, ending decades of bureaucracy known as “License Raj.” He has necessarily chosen a course of deliberation, although his spirited critics, many of whose hands are not on the tiller of governance, wish for a more dramatic and rapid course toward development and economic change. In a country where rural populism can be a potent and destabilizing force, a measured approach to development is the wise play.
India is the land of Scylla and Charybdis, an analogy I have used before in these pages. We must wish Mr. Modi well as he navigates the narrow and dangerous strait.
Notice to Readers: The American Spectator and Spectator World are marks used by independent publishing companies that are not affiliated in any way. If you are looking for The Spectator World please click on the following link: https://spectatorworld.com/.