India’s Inward Turn Could Stymie Its Rise
Modi is hoping the country’s consumers will constitute a big enough market to power the economy. That could be a major miscalculation.
Customers at market stalls selling computer accessories, clothes and other goods in New Delhi.
Photographer: Anindito Mukherjee/BloombergShortly before the 2014 election that made him prime minister, Narendra Modi came up with the idea that India’s young population, constitutional checks on arbitrary political power and large domestic market would bring prosperity over a decade. He even coined a slogan, calling it the nation’s 3D advantage — demographics, democracy and demand.
India’s democratic institutions, such as the judiciary and a free press, have frayed under Modi. With just over 40% of the labor force engaged in the economy — among the worst rates of worker participation anywhere in the world — the youth-bulge narrative has also lost its sheen. What remains of the 2014 mantra is demand. But how big an advantage is the domestic Indian economy? Can an inward-looking growth strategy create enough jobs and attract the capital that’s fleeing China?