India’s Optimism Is a Welcome Antidote to Western Pessimism
Americans suffering a crisis of confidence about the future of their country’s democratic institutions under President Donald Trump could use a dose of Indian-style optimism. Prime Minister Narendra Modi, elected on a populist platform in 2014, has just won a landslide victory for his Bharatiya Janata Party (BJP) in elections in Uttar Pradesh, India’s biggest state. In his third year in office, voters have heartily endorsed his overthrow of establishment elites and pursuit of an ambitious reform agenda that is transforming the country by kindling economic growth and hope. India’s experience offers a useful antidote to Western pessimism — and a reminder that democracy can offer solutions to the growth and governance dilemmas that afflict the United States and Europe.
Modi’s strong approval ratings — about four in five Indians have a favorable opinion of their prime minister — combined with the BJP’s remarkable victory in Uttar Pradesh, home to 200 million Indians, demonstrate that bold leadership is compatible with public support. India’s sheer size and scale make it a fractious democracy — three dozen parties hold seats in Parliament, and powerful regional chieftains resist edicts from the distant capital. But the political polarization and gridlock that characterize Washington are less evident in New Delhi, in part because the prime minister won a strong mandate and is doing something with it.
India’s economy is expanding at around 7 percent a year, powered by the demographics of the world’s largest population of young people, but also, importantly, by “big-bang” reforms. The country is enacting a national goods and services tax that will rationalize and unify its internal market, currently broken down into 29 state markets. Doing this required revising the Indian constitution, no small task in the world’s biggest parliamentary democracy.
Modi’s government has also liberalized foreign investment in a range of sectors, passed a bankruptcy bill to help recapitalize banks hit by bad debts, and made a revolutionary break from an economy 95 percent dependent on cash transactions by temporarily abolishing most of the currency in circulation. Although the roll-out was bumpy, this controversial reform will help transition India to a digital economy, expand tax revenues by placing more economic activity in the formal sector, and clamp down on corruption by curtailing the supply of “black money.”