The Leader and the Sign of the Times
Mr. Modi has secured a historic victory and has the chance to steer India in one of the most important phases, which has the potential to take hundreds of millions out of poverty and place India on the stage of world power. The ‘world’s largest exercise in democracy’, the Indian general election, concluded earlier this month with over 600m votes cast across seven phases of polling, spread over a period of five weeks, with more than 67% of India’s voting population turning out to express their preference. While Prime Minister Modi’s approval ratings have remained high over the last five years, the vast majority of opinion polls leading up to the general election seemed to indicate that the National Democratic Alliance (“NDA”), led by Mr. Modi’s Bhartiya Janata Party (“BJP”) would fall just short of a majority. However, the election results, announced on May 23rd, have proven this opinion polling data to be significantly off the mark. In a repeat of the 2014 general election result, the NDA was voted back into office with a significant majority, winning 352 out of a total 541 parliamentary seats in the Lok Sabha (India’s lower house of parliament), and with the BJP itself winning 303 seats directly, 21 more than in 2014. Mr. Modi has now been presented with a once-in-a-generation opportunity to transform the country by building on the successes of his first term (“NDA I”) in office and finishing the job on the pending policy priorities from the past five years and prioritising the most critical new issues that have arisen in the intervening period since the last election. He also has the window to prove he is all about development and put to rest the questions raised on nationalism, divisiveness and religious discrimination. This month’s Sign of the Times, in addition to briefly analysing the results of the 2019 general election, seeks to outline a policy mandate for the next five years that will enable the new government (NDA II) to take India to a US$5tn economy and make the significant step in the phase of India’s ‘Rise to Significance’.
India’s general election, the ‘world’s largest exercise in democracy’, is now underway with the first votes in a multi-phase process cast, with result to be announced on the 23rd of May. While opinion polls are projecting a wide range of outcomes, they currently favour a win by the incumbent BJP and its leader, Prime Minister Narendra Modi. If elected, Mr. Modi would be entrusted with the responsibility to lead India during one of the most critical periods in the country’s history. Following nearly two decades since India’s initial economic liberalisation, during which the country has seen strong, if volatile growth, India today is on the cusp of entering a new phase of growth that will take the country from US$3tn GDP this year to $5tn by the next general election in 2024.
India’s economy is in the midst of a rapid transition and is expected to overtake the US in size by 2030. With its GDP projected to cross US$3tn this year and US$8tn within the next decade, this transformation is extraordinary in terms of both its scale and its speed, with India’s growth now accelerating faster than any other major economy’s. Last month’s Sign examined the key underlying drivers of India’s transformation – its favourable demographics resulting in mass-scale urbanisation, technology adoption, consumerism and financial inclusion – all underpinned by India’s representative democracy and the resulting peaceful development of its society. In absolute terms, India’s growth is comparable only to China’s, which underwent a similar transition from 2006-2014 as its GDP expanded from US$2.7tn to US$8.1tn. China’s growth transformed its industries, its capital markets, its society and its politics and also drove seismic geostrategic shifts that resulted in global political and economic realignments. India’s rise over the next decade is likely to drive similar domestic transformations, ending extreme poverty, creating a massive urban middle class, and scaling domestic companies into global leaders. However, even though India’s rise is widely expected to be peaceful, its emergence as a real economic superpower will also likely disrupt the global economic and political status quo, shaping and re-shaping regional and global power alliances over the next decade and beyond.
The crisis which unfolded between India and Pakistan in Kashmir at the end of last month captured the top of global news headlines, pushing aside the failed US-North Korean nuclear summit, the unfolding crisis in Venezuela and the unending Brexit. India and Pakistan carried out air raids inside each other's countries for the first time since the 1971 war and raised fears of a major military escalation between the two nuclear-armed nations. New Delhi and Islamabad also engaged in a battle of conflicting military claims, obscuring many of the facts around what actually happened for the domestic and global public. What is known is that the conflict was triggered by a terrorist attack on Indian paramilitary forces in Kashmir which killed 49 soldiers on February 14th. Jaish-e-Mohammed (“JeM”), an Islamist group which operates out of Pakistan claimed responsibility for the attack. This attack triggered a vigorous response by India, which launched an airstrike into Pakistan, allegedly on a large JeM terrorist training camp. While the narrative around events begins to diverge here, it appears that the Pakistani air force retaliated by sending aircraft of its own against targets across the Line of Control with the aim of targeting military installations, with the resulting engagement leading to the shooting down of one Pakistani and at least one Indian jet over Pakistani airspace, taking the pilot prisoner.