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The political economy of populism in India

As India votes in the country’s 2024 general election, PROFESSOR LOUISE TILLIN examines the sources of populism in India, its recent developments, and the fusion of populism with authoritarian and majoritarian ideas.

Populism in India has taken shape in a different socioeconomic context than in the West: one of rapid economic expansion. Bharatiya Janata Party leader and Prime Minister Narendra Modi—a populist strongman par excellence—rose to the national stage as India emerged from an era of ultra-high growth, sometimes described as India’s “gilded age,” for its production of India’s "billionaire raj.” Between 2003 and the global financial crisis of 2008, India’s economy grew at almost 9% per annum. Growth tapered after the financial crisis but, with the exception of the Covid-19 pandemic years, has largely remained over 5% per annum since. In this period, India has seen poverty fall, but amidst high and increasing levels of inequality.

When Modi hit the national stage ahead of the 2014 elections, he harnessed new digital media tools and communication strategies to develop a leader-centric politics. Modi’s populist appeal was not to those who were left behind by prevailing patterns of capitalist development, as in the West, but to those who had experienced the tailwinds of India’s rapid growth and aspired to get ahead—just like Modi’s own apocryphal ascent as the son of a “chai wallah” (tea seller). Modi promised to boost growth and give India’s youthful aspirants a stronger foothold in the economy—promising them jobs rather than the welfare entitlements emphasized by the Congress Party-led United Progressive Alliance that governed from 2004 to 2014.

Such aspirational politics always took place within a superstructure of Hindu nationalism, with Modi having earned his spurs as “Hindu Hriday Samrat” (Emperor of Hindu hearts) while chief minister of Gujarat from 2001 to 2014. In Gujarat, Modi presided over large-scale Hindu-Muslim riots in 2002 and a model of highly unequal pro-business capitalist development that maintained its legitimacy via recourse to a polarizing Hindu nationalism.

The Hindu nationalist approach has become more preeminent at the national level over the last decade, alongside a more authoritarian attitude towards politics. What began as an election pitch in 2014 focused on offering economic opportunities and jobs to those Modi described as the aspirational “neo-middle class” soon gave way to the embrace of similar kinds of populist strategies associated with the radical right in Europe, although designed in the Indian context.

This embrace of populism fused with authoritarian and majoritarian ideas happened once it became clear that the government would be unable to fulfil its promises on employment creation, due to the inherent difficulty of growing a mass-employing industrial sector in a short space of time. The BJP populist playbook seeks to pre-empt the articulation of economic grievances that might otherwise delegitimize or destabilise the ruling coalition.

Economic growth, stagnant equity

While economic growth in India since the early 2000s increased non-agricultural employment, most jobs remain in the informal sector (which accounts for about 80% of total employment, down from 87% in 2004-5). Such jobs lack the security of regular wage or salaried employment. During the pandemic, many workers returned to agriculture or self-employment, reflecting their precarity.

Furthermore, economic growth overall produces fewer jobs in India than in other developing countries owing to the structure of the economy. Growth is driven by high-skilled, capital-intensive service sectors rather than manufacturing industries, which means relatively fewer job opportunities have been created. Rates of unemployment are high, particularly among younger voters. As many as 42% of graduates under 25 are out of work.

In such circumstances, levels of inequality in India are among the highest in the world. A new report by Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi for the World Inequality Lab shows that the top 1% of India’s population account for 23% of all income and 40% of wealth. This is the highest level of income concentration since 1922. The authors write, “It is unclear how long such inequality levels can sustain without major social and political upheaval.”

Modi’s populism offers the majority Hindu community a simple set of explanations about the forces that stand in the way of their advance. It is an ideology focused on the empowerment of the majority that has been—according to its ideologues—silent and marginalized for too long. It is defined against a corrupt, cosmopolitan elite associated with the Congress Party, which has promoted a misleading form of “pseudo-secularism” that has favored minorities, especially Muslims and pursued a divisive “anti-national” politics.

The BJP under Modi has combined this right-wing populism with a paternalistic and compensatory form of welfarism. On coming to office in 2014, Modi pledged to dismantle an earlier era of welfare “entitlements” that he argued served only to demonstrate the corrupt decadence of the Congress Party in failing to reduce poverty. But very soon, the BJP fell back on welfare transfers, promising to harness digital platforms to circumvent “corrupt” local intermediaries by delivering benefits directly to those in need.

This dual model of an increasingly exclusionary form of Hindu nationalism accompanied by welfare provision has served as the core of the populist offer in India and the means of attaching legitimacy to the country’s deeply unequal pattern of economic growth.

Indian populism and attitudes to capitalism

But what does Modi’s popularity tell us about prevailing attitudes to capitalism in India? How much do we know about what voters want and whether support for Modi reflects support for the economic model that he represents?

Indian voters are not clearly differentiated on economic ideology. As the political scientists Rahul Verma and Pradeep Chhibber have shown using voter survey data, the average voter has fairly center-left statist views on the economy in terms of attitudes towards things such as privatization, restrictions on land ownership, and government support for the poor. BJP voters are not very different to Congress Party voters in this regard.

Indian party politics has also not traditionally been defined by a left-right or pro-worker/pro-market ideological cleavage. While the BJP is seen as ideologically more inclined to a pro-business approach and to favor infrastructure expenditure over social policy expenditure to grow the economy and reduce poverty, these ideological views are well-represented in the Congress Party too. It was the Congress Party, for instance, which oversaw economic liberalization in the early 1990s. The Congress Party also saw fierce internal debate over the expansion of social expenditure when they were last in power nationally at the helm of the United Progressive Alliance (UPA) government (2004-14).

Yet, the rise of the Modi-led BJP did crystallize a clearer ideological debate about the role of the state in the economy. The debate was encapsulated by two books published ahead of the 2014 elections promoting different views for the future of India’s political economy. The first, Why Growth Matters,by the economists Jagdish Bhagwati (a long-time proponent of economic reforms) and Arvind Panagariya (a close policy advisor to the BJP after 2014), argued that India’s economy needed to be further unshackled from state interventions. The second, India’s Uncertain Glory, by Jean Drèze (an advisor on social policy to the UPA) and the Nobel Prize winner Amartya Sen, argued that rapid economic growth required greater public attention to tackling endemic poverty and inequality.

The BJP came to power on a platform that promised to free economic growth from statist interventions. While it has not completely followed this prospectus in office, especially due to the continuation of welfare policies, the form of welfarism it has pursued is very different to the rights-based approach promoted under the UPA (in alignment with the ideas of Drèze and Sen). This rights-based approach sought to unleash bottom-up pressures on the state to deliver public goods and services by empowering citizens to demand entitlements from the state, such as a right to employment under the National Rural Employment Guarantee Scheme.

Thus, while each party represents an ideological spectrum with considerable middle-ground, there are differences in emphasis, with the Congress Party more inclined to favor social expenditure; while the BJP has been more likely to favor a larger role for the private sector. These distinctions in emphasis also reflect the traditional social support bases of both parties, with the BJP’s core social support traditionally coming from richer and more urban middle classes. But again, these traditional support bases have blurred as the BJP has made inroads among lower caste and poorer voters since 2014.

Many lower-income BJP supporters thus support the party in spite of the party’s traditional social and urban biases, and despite the fact the party has failed to make inroads in reducing income inequality and youth unemployment.

Crowding out policy debate

Going into the 2024 elections, populism in India has taken on increasingly authoritarian overtones with the arrest of several opposition leaders and heightened majoritarian rhetoric. Modi’s inauguration of a temple to Lord Ram—the Ram Mandir—in Ayodhya, a site previously home to a Mughal era mosque torn down by Hindu nationalist volunteers in the early 1990s, set the tone for the election campaign to come.

This form of politics is drowning out much-needed policy debates about how to deal with the question of employment generation and India’s stalled structural transition to a broader-based economy less dependent on the service industry.

Over the last five years, the main response to these structural problems has been subsidizing areas of relative economic distress (such as agriculture, via subsidies to farmers) and the vigorous promotion of a Hindu nationalist agenda.

There are ideas circulating around industrial and social policy in academic and political spaces. The BJP has its own version of an industrial policy with incentives to encourage production and inducements to foreign companies to Make in India, but there is little vigorous debate in the electoral space about whether these policies are bearing fruit.

Instead the BJP has increasingly promoted job creation as an individual responsibility, seeking to foster a culture of entrepreneurship rather than reliance on the government to create employment.

The Congress Party has mooted a universal basic income, as well as a new apprenticeship scheme as a route to “guaranteeing” employment. Many state governments have invested in new social transfers aimed at women, but harnessing these policies to improve the employment and empowerment of women remains a work in progress.

Voter surveys show that unemployment is a primary concern for voters, especially the youth, but how this will affect support for the BJP is yet to be seen. The tilting of the electoral playing field against opposition parties through manipulation of election financing, arrest of opposition leaders, and media capture makes it more difficult for policy debates about economic policy and employment to cut through in the electoral arena.

If the BJP win the elections, as is widely forecast, no major changes are anticipated in its economic program, with the party pledging to maintain and extend its existing policy agenda. The question is whether a BJP emboldened by winning a third term pushes ahead with more far-reaching Hindu nationalist agendas that may ultimately come into tension with political and economic stability. For the opposition’s part, the INDIA alliance (a Congress Party-led coalition of 41 parties) has pledged to do more to tackle unemployment and economic distress if they come to power. But they will also face an uphill struggle to reorient the economy towards sustainable employment creation and the reduction of inequality. Without broad, well-renumerated employment, populism will continue to find fertile ground in India.

This article was first published in Promarket, a publication of the Stigler Center at The University of Chicago Booth School of Business. 

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Louise Tillin

Louise Tillin

Professor of Politics

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