Modi Has Lula’s Charisma – But Will His Legacy Fare Better? 2

Around this time a decade ago, I attended a lecture at the London School of Economics.

To ear-splitting whoops and whistles, the LSE’s normally stuffy lecture hall was transformed into something more like a rock venue with outpourings of emotion for Brazil’s then-President Luíz Inácio Lula da Silva.

Last week, suited businessmen and sari’d women cheered Narendra Modi with similar exuberance. To each of his self-proclamations of achievement, an otherwise sober crowd at the Global Business Summit in New Delhi clapped ecstatically – about every fifth second.

“India’s highest generation of electricity was achieved in 2015” – a round of applause.

“India’s highest ever urea fertilizer production was achieved in 2015” – more applause.

- Advertisement -

“India’s highest turnaround time in court cases was achieved in 2015” – clap clap clap clap clap.

Confounding Economists

 

Pulling off such crowd pleasers takes rhythm – and balance.

Modi plays to the markets and political right: “Opportunity is like oxygen to the average citizen, and we should ensure it is never in short supply.”

And to the left: “Some subsidies are necessary to protect the poor and give them a chance to succeed.”

As with any other rock-and-roll celebrity, he also makes a point to rebel from the establishment. He mocks those economists and experts gathered at the conference who tend to refer to any payments to the poor for fuel or fertilizers as subsidies – while simultaneously branding government spending toward industry or commerce as incentives – even when they result in total exemption from income tax.

“Experts have commented on the need to reduce subsidies,” he acknowledges. “But fuel subsidies are generally difficult to tackle.”

So Modi’s approach has been to reduce bogus claimants. The first step: pay the beneficiary directly into a bank account. That way, a person’s income – and eligibility – is easier to measure and monitor. Three-quarters of the savings from more efficient distribution of subsidies goes to the local states, giving them an incentive to help eliminate fraud.

The next step was to appeal directly to the people – to voluntarily surrender subsidies they shouldn’t be entitled to.

Economists believed people would “never give up a benefit to which they’re entitled to,” Modi teased again. “It warms my heart to see that so many of them have come forward with no compulsion, to benefit the poor and give up their subsidies” – almost six and a half million people.

Modi took office in 2014, and some have begun to grumble that he has been more than a little slow getting started. But, as he has done with most of the nation, I notice that he soon has the audience singing to his tune. Reform could have gone faster but for the 758 laws that are currently awaiting agreement from the upper house, he says to a sea of nodding heads.

Modi

Devil or God?

Lula, who Barack Obama once called the most popular politician on Earth, came to government in Brazil with similar firebrand spirit that won over workers and investors alike only to lose political capital in the corruption scandal that has engulfed his protégé, President Dilma Rousseff.

Modi is certainly pushing to avoid any such legacy. “Every one of the changes we have made is in the direction of good governance,” he says. The country has climbed in the World Bank’s Ease of Doing Business survey under Modi’s initiatives.

So will Modi succeed where Lula has failed?

“The devil is in the detail,” Modi cautions. “God is in the proper execution.”

2 February 2016

- Advertisement -