Examining Modi's Reform in India: A Chinese Scholar's Perspective
Mao Keji's Analysis of Modi's Reforms from the State Capacity Perspective
India's general election came to a close today, with the Bharatiya Janata Party (BJP) securing a lead, albeit narrower than predicted. Nonetheless, the BJP has secured its position as the foremost political party in India. So, for today’s episode, I’ve translated a piece named "Modi's 'Indian Dream': The Triple Tasks of India's State Capacity Building." (莫迪的‘印度梦’: 印度国家能力建设的三重任务) by Indian specialists Mao Keji(毛克疾). He is the Assistant Research Fellow at the International Cooperation Center of the National Development and Reform Commission. This article was first published by “Wenhua Zongheng.”(文化纵横)
The author believes that Modi’s government embarked on a completely new path in terms of culture, governance, and economic development. This article analyzes how Modi and the BJP he leads have unprecedentedly promoted the construction of India's state capacity since coming to power in 2014, focusing on efforts in three aspects: social integration capacity, political governance capacity, and economic regulation capacity. The goal is to fundamentally break the shackles that have long constrained India's modernization and development and to unleash the enormous potential of India's billion-plus population fully.
Since the original article is too long, I’ve made a long summary. For those who can read Chinese, I highly recommend reading his original text.
The Deficit in India's State Capacity
From a certain perspective, the deficit in state capacity is an obstacle preventing India from realizing its great power aspirations. The Indian government has long been hampered by various social, political, and economic factors in advancing its governance. In the social realm, India is mired in acute communal conflicts, with groups divided by caste, ethnicity, religion, and class, each pursuing their own agendas and interests, resulting in weak cohesion and difficulty in reaching a broad consensus on the direction of national progress. In the political realm, for a long time after independence, India was trapped in a governance quagmire of dysfunctional mechanisms, manifested in a lack of political ideals, with various levels of government relying on block voting to control localities, leading to systemic corruption and difficulty in forming the policy execution power necessary to support national progress. In the economic realm, India's "superstructure" and "economic base" are misaligned, locking development potential, with various economic entities clinging to vested interests, making it difficult to play to comparative advantages, resulting in low efficiency of economic operation and failure to cultivate the economic dynamism needed to drive national progress. Therefore, promoting reforms aimed at social integration, political transformation, and economic transformation to improve India's state capacity has been a task that successive Indian governments have long aspired to but struggled to accomplish since independence.
Modi's Rise and Reform Expectations
In 2014, Modi led the BJP to a sweeping victory in the general election, gaining the highest vote share of any party in Indian politics in over 30 years and becoming the first governing party since 1989 that did not rely on a coalition government. He then broke his own voting record from 5 years prior in the 2019 election. In this context, with the extremely high reform expectations he enjoyed while governing at the local level, Modi naturally became the most highly anticipated reformer since India's independence. However, most current analyses of Modi's reforms often focus on specific policies such as the "Make in India" initiative, the Goods and Services Tax reform, and demonetization while overlooking the more critical and more abstract state capacity reforms that run through these policies.
Compared to India's previous leaders, Modi and the BJP he leads are indeed demonstrating unprecedented courage and determination in promoting state capacity reforms. In terms of social policy, Modi's reforms are mobilizing Hindu nationalist forces to carry out cross-communal "national identity" integration; in political policy, they are deeply practicing the efficient organizational mechanisms of "Leninist party-style," consolidating and strengthening the BJP's status as a national party; in economic policy, they are conforming to India's need to participate in the global industrial division of labor and proposing development-oriented industrial policies and trade policies.
The Importance of India's Rise for China
India is not only the world's only super-scale country with a billion-plus population besides China but also borders China. India's entry into the global economic division of labor will inevitably put it in a similar ecological niche as China. From this perspective, while India's development trajectory may seem to be an issue of economics and industry, it is actually a geopolitical issue that will inevitably have a profound impact on China. This article aims to analyze the key variable of India's state capacity, attempting to clarify the policies put forth by Modi and the political forces he represents in the social, political, and economic domains with the goal of building a modern and powerful country, and to assess and discern their effectiveness in a longer historical perspective.
State Capacity in the Indian Context
Wang Shaoguang and Hu Angang's 1993 "Report on China's State Capacity" provided a good entry point for understanding how to build China, a populous and vast country with uneven development, into a modern and powerful nation. It also provides an analytical framework that can be used to understand the rise of other developing countries. However, due to the vastly different social, political, and economic situations of China and India, "state capacity" has completely different connotations in the two countries. Therefore, a broader definition of state capacity, encompassing social integration capacity, political governance capacity, and economic regulation capacity, is needed when examining India's problems.
China has already accumulated strong stock state capacity in the social and political domains due to its history of grand unification, highly homogeneous society, and unified and centralized leadership by the Communist Party. In contrast, India faces more fundamental issues of social group fragmentation and political dysfunction. Overall, social integration provides the social raw materials and capital for political unification and upgrading, while political unification provides the political vehicle and platform needed for social mobilization; political unification provides the political capital to break through the barriers of vested interests for economic transformation, while economic transformation provides the legitimacy brought about by the incremental distribution of economic dividends for political unification; economic transformation provides the soil and space for the formation of a new social structure for social integration, while social integration provides the material and spiritual preparation needed for the socialized mass production of economic transformation.
Advancing Social Integration Through "Nation Reconstruction"
American economist Simon Kuznets once regarded "social integration" as an important prerequisite for a country's political and economic modernization. From this perspective, the long-term severe fragmentation of groups within Indian society and the overall low level of social integration have severely limited India's ability to promote economic development and improve political governance.
Unlike ancient China, ancient India never had a central dynasty that could stably rule most of the territory of modern India, lacking the historical opportunity to carry out nationwide social integration. Although India has had a thousand-year history as a geographical concept, its boundaries as a political entity were not finally established until the late 19th century.
India long lacked a strong centralized government and had difficulty forming a stable hierarchical, bureaucratic structure, but instead formed a dispersed and intertwined structure of fragmented rule. In most parts of India and for most of India's history, social groups based on religion, village, and tribe replaced the state and dominated all aspects of cultural, economic, and political life, while Indian society was divided into self-governing, self-reliant, small communities according to divisions of ethnicity, caste, religion, and class. It was on this basis that the British colonizers established modern bureaucratic rule in India, imposing the key role of the "state" in Indian social life for the first time.
Faced with the challenge of maintaining unity after independence, India's founding political elites chose "Indian Nationalism" based on the identity of being a citizen of the republic. Under the guidance of inclusive Indian nationalism, the Congress elites designed a political system characterized by compromise and eclecticism to defuse ethnic, religious, and caste conflicts.
However, despite the blessing of this political system, the pluralistic heterogeneity of Indian society has always existed, and subnational identity and identity politics around religion, caste, ethnicity, and class remain the main variables in Indian social and political life. Indian nationalism characterized by federalism, secularism, progressivism, and socialism only puts the clearly fragmented communities into a frame and binds them together with "civic identity", but does not integrate them into an organic whole "nation". Although Indian nationalism can only maintain a loose sense of national identity and low social cohesion, its institutional design, characterized by compromise and eclecticism, makes it convenient for various small groups to defend their respective spheres of influence, hindering India's advancement of social integration at the national level.
Undoubtedly, although Indian nationalism has long maintained India's superficial unity, its inability to promote deep integration of Indian society has instead seriously hindered India from realizing its grand political ambitions. In this situation, Hindu nationalism, which takes Hinduism as its identity base, has a strong sense of enterprise and can cover the greatest common denominator of Indian society to the greatest extent possible, has become the best substitute for Indian nationalism. Therefore, contemporary political elites represented by the BJP have embraced Hindu nationalism and made it the ideological foundation and political rationale supporting India's future rise as a great power.
Hindu nationalism's goal of "nation reconstruction" has become the objective of India's deep social integration. India, divided along ethnic lines, cannot find an absolutely dominant ethnic group, while division along caste lines is too fragmented, and division along class lines may lead to dramatic social revolution. Therefore, only under religious division can India both distinguish the dominant and subordinate positions of Hindus (about 85% of the population) and Muslims (about 15% of the population) and be able to encompass and dissolve ethnic, class, and caste divisions. In this sense, Hinduism is the greatest common denominator of Indian society. Hindu nationalism can strengthen Hindu identity by replacing the void of national civic identity, incorporating up to 85% of India's nationals into the identity of "Hindus", and enhancing the cohesion within the Hindu community by isolating Islam and Muslims as the "other", thereby shaping the so-called "Hindu nation". India's promotion of "nation reconstruction" with reference to the template of the modern nation-state is to integrate the originally fragmented Indian society, and the incremental cohesion generated by this will help India to promote the daunting tasks of political unification and economic transformation.
Promoting social integration through "nation reconstruction" is a vast and earth-shaking project that requires long-term perseverance to achieve. Modi and the BJP have launched many effective social movements in this regard, such as establishing the RSS's cellular organization Shakhas throughout India, sending volunteers to marginal communities to increase the penetration and appeal of Hindu nationalism, and combining religious symbols with political rhetoric to carry out social mobilization oriented towards political goals. The election of Yogi Adityanath as Chief Minister of Uttar Pradesh in 2017 in the dual capacity of Hindu monk and Hindu nationalist leader indicates that the social integration campaign led by Hindu nationalism has already achieved considerable political results. However, this "nation reconstruction" movement is still ongoing and is only part of the overall picture of India's state capacity reform.
Improving Governance Capacity Through "Political Transformation"
Indian society is extremely pluralistic. To prevent internal division, Congress's founding elites pursued Indian nationalism, which was characterized by compromise and eclecticism, with "civic identity" at its core. However, this political mechanism contains irreconcilable contradictions between establishing a dispersed power structure to cater to the needs of various parties and emphasizing central authority to prevent localities and communities from causing trouble. In the early years of India's founding, the Congress was still able to maintain the smooth operation of Indian politics amid this contradiction, but as the Congress declined, Indian politics fell into a situation of central fragmentation, provincial fragmentation, and local feudalization. Modi's landslide victory leading the BJP in 2014 signaled that the long-standing dysfunctional situation of India's political mechanisms would usher in a breakthrough.
Although the Congress basically maintained its dominance over the political arena for nearly 30 years after India's founding, it eventually gradually degenerated into a loose political alliance due to its lack of ideological appeal and organizational mobilization capabilities. As the authority of Congress gradually disintegrated, concrete interest-seeking replaced nebulous ideological appeal and became the undisputed theme of elections at all levels, stimulating various social groups to form parties and unite to fight for greater interests. Since the 1980s, Indian politics has rapidly diversified along the fault lines that divide Indian society, with various parties springing up and political factors resonating and reinforcing social factors. From 1989 to 2014, successive Indian general elections resulted in no party receiving more than half of the votes, and "hung parliaments" became the norm in the political arena.
Due to the comprehensive rise of small parties representing partial social interests and "hung parliaments" becoming the norm, state capacity has been severely weakened, causing the Indian political arena to face a full-scale governance crisis from the central to the local level. At the central level, the prevalent "negative politics" in the ruling coalition has created too many political fetters, making it impossible to promote decisive and effective governance, seriously eroding the decision-making and governance capabilities of the Indian center. At the provincial level, with the weakening of party ideology and short-term interests and community interests becoming the main considerations, local politics has fallen into a crisis of fragmentation. At the local level, voters form voting blocs around local strongmen, becoming group forces that dominate the direction of local politics.
It is against this background that the BJP, which adopts "Leninist party organizational techniques," began to stand out and gradually show its edge. After its landslide victory in 2014, the BJP became the first party to win an outright majority in the Lok Sabha since 1989. The BJP's strength comes from its clear ideological purpose of Hindu nationalism, its wide range of united front social organizations giving it unparalleled social coverage and mobilization capabilities, its strong professional cadre team of devout Hindu nationalists, and its hierarchical top-down vertical management organizational structure.
In addition, the BJP is adept at using Internet technology and new media to obtain political dividends, which has become a major focus of Modi's optimization of political governance capabilities. The Modi government has also relied on "Digital India" to solve many long-standing governance problems, such as linking India's nationwide digital identity card system with its digital payment interface.
The BJP's advanced organizational form is the fundamental reason for its strong rise in recent years, partially solving the long-standing problems of fragmentation and feudalization faced by the Indian political arena and greatly improving India's state capacity. However, there are still many aspects of the Indian economy and politics that Modi is unable to push reform on, and further deepening the BJP's organizational form depends on whether it can create strong enough social cohesion and mobilization power for political unification through "nation reconstruction," and whether it can promote India's industrialization leap in the economic domain to provide economic dividends for political unification.
Advancing Industrialization Through "Economic Transformation"
Although India is currently one of the fastest-growing major economies in the world, it still faces many obstacles in further achieving industrialization and modernization to catch up. The current Indian central government faces a pair of seemingly contradictory tasks in the economic domain: strengthening the government's ability to regulate economic activities and enhance its control over the macroeconomy while also limiting government intervention in economic activities and eliminating vested interest groups attached to the system.
After being oppressed by British colonialism for centuries, India was extremely eager for independence and self-reliance economically and politically at the beginning of its independence. The Soviet-style planned economy with highly concentrated resources naturally became the first choice to achieve industrialization on an extremely backward agricultural economic foundation. However, although the Indian central government had extremely high economic control, it was not compatible with India's extremely low level of social and political integration, resulting in the planned economic system becoming a shackle suppressing economic vitality.
After the founding of China and India, both countries established planned economic systems, but the political and social foundations behind them were vastly different, bearing completely different results. China's planned economic system was based on the people's democratic dictatorship led by the Communist Party, giving the Party not only economic control but also strong social mobilization and resource allocation capabilities. In contrast, India inherited British parliamentary democracy in its superstructure while its grassroots was stratified along the fault lines of caste, religion, ethnicity, and class, forming various small interest groups with strong feudal characteristics. As a result, even under the planned economy, India's overall state capacity was still weak.
For a backward agricultural country, the typical path to industrialization and catching up is the "scissors gap between industry and agriculture", using government intervention to keep industrial prices high and agricultural prices low in order to extract agricultural surplus value for industrial investment. China was able to take the first step in industrialization on an extremely weak economic foundation by extracting rural economic resources through land reform. In India, Nehru also hoped to promote land reform to extract rural resources for industrialization, but it ultimately failed due to a lack of political execution power and social mobilization capabilities, as well as obstruction by various interest groups. India's failure to complete thorough rural reform, social transformation, and grassroots political power-building severely limited the central government's resource extraction capacity.
During the planned economy era, although India built a huge state-owned economic system, these enterprises often did not listen to orders and instead became vested interest groups that manipulated the central government's decision-making due to the lack of a political system sufficient to control them. As the industrial-scale rose, the Indian central government's resources became stretched thin, resulting in systemic risks. From the 1950s to the 1980s, India's GDP growth averaged only 3.5% annually. The long-term stagnant economy finally prompted the Indian government to implement thorough market reforms in 1991.
Since the start of reforms, India's economic growth has increased significantly, but its economic state capacity has further revealed shortcomings, especially in the government's low degree of control over economic activities and inability to effectively regulate. The Modi government's brief period of prosperity after being elected in 2014 had an element of "luck" due to sliding international oil prices easing India's deficits.
Although the 1991 market reforms made progress in areas such as market access, production licenses, and foreign investment restrictions, India's labor and land policies remain two major chronic illnesses hindering its rise. The inability to comprehensively advance key reforms has led to strict labor standards, difficulties in land acquisition, slow infrastructure progress, and the inability of Indian industrialization to enter the fast track of large-scale development, forcing a large number of workers to remain in the inefficient informal sector, while many projects are forced to be shelved due to land acquisition issues.
At present, the essence of India's economic development problem is the misaligned development of the "superstructure" and the "economic base": India borrows the superstructure of the post-industrial era of Europe and the United States, but its economic base is still stuck in the feudal pre-industrial stage. India's electoral democracy, coupled with an "overly advanced" legal system, consolidates individual closed vested interest groups: Indian workers often abuse labor protection laws and resolutely oppose rural labor entering urban factories in order to maintain a stable life and high wages; small landlords form alliances and would rather let the land lie idle than demand sky-high prices, making industrial land acquisition costs prohibitively high; small business owners form political pressure groups and would rather stick to extremely low labor productivity than allow administrative licenses to limit large-scale production. In this situation, even though India has the world's most abundant cheap labor and land resources, it is still unable to enjoy the factor dividends and potential it should have to drive the industrialization process.
Without thorough social integration and political unification, Modi cannot fundamentally improve the state's capacity in the economic domain by relying solely on administrative means. When Modi swept to power in 2014, he immediately set about promoting labor and land reforms but encountered enormous political resistance due to the involvement of the interests of numerous workers and farmers. At present, the Modi government is still pushing labor reforms, but their prospects are bleak due to great controversy. In the land domain, Modi's attempt to amend land acquisition laws through executive orders after coming to power in 2014 also came to nothing due to strong resistance.
In the final analysis, reforms in the economic domain need to be laid by reforms in the social and political domains. In this sense, India's economic transformation not only tests the effectiveness and quality of India's social integration and political unification but, in turn, also provides the necessary impetus for social integration and economic reform.
Conclusion
Although the concept of "state capacity" itself is not explicitly mentioned, the broad state capacity reform covering society, politics, and economy runs like a thread through the policy practices of the Modi government. Compared with previous generations of Indian leaders, Modi has grasped the main contradiction between India's soaring national ambitions and insufficient state capacity and has successively enhanced state capacity in the social, political, and economic aspects. The "nation reconstruction" led by Hindu nationalism may be the biggest window of opportunity for reshaping Indian society in the contemporary era, and the deep social integration it drives creates the basic social foundation for political unification and economic transformation. The Bharatiya Janata Party extracts a highly impactful vanguard from contemporary Indian society with unprecedented organizational power, becoming the vehicle and driving force for social integration and economic transformation. Completing the industrialization and modernization of a billion-strong population has been India's biggest dream since modern times. This not only determines whether India's social integration and political unification can be consolidated, but more importantly, it determines whether India can truly rank among the world's great powers.