Modi's cut an impressive swath abroad.

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The Real Winners in Modi's India

Pankaj Mishra is a Bloomberg View columnist. His books include “From the Ruins of Empire: The Intellectuals Who Remade Asia,” “Temptations of the West: How to Be Modern in India, Pakistan, Tibet and Beyond” and “An End to Suffering: The Buddha in the World.”
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One year after being triumphantly elected, Narendra Modi’s Hindu nationalist government appears to be floundering -- a perception now shared across the ideological spectrum. Former right-wing minister Arun Shourie, who previously hailed Modi as India’s savior, called the government "directionless" in a recent interview, and said it had caused "great anxiety" among religious minorities.

QuickTake India's Aspirations

Foreign investors -- among those most enthused by Modi’s victory last year -- are beginning to express doubts as well. In the first half of this month, foreign funds have withdrawn more than $550 million from Indian stocks -- a pace that would make May the worst month since August 2013. The rupee is wilting again. The financial year ending in March 2015 is likely to reveal India’s weakest earnings performance in years.

Non-resident Indians have ecstatically received Modi abroad. At home, however, farmers accuse him of being a slave to corporate interests, and CEOs are so disgruntled that Ratan Tata, one of Modi's earliest and most high-profile corporate supporters, had to step in last month to counsel patience. 

More damagingly, even as farmers face another bad monsoon, Modi’s government doesn’t seem to have made any solid moves to generate manufacturing jobs for the nearly one million Indians that enter the workforce each month. Modi keeps repeating the slogan "Make in India" without having advanced the land and labor reforms, as well as the heavy investments in education, needed for any sustainable manufacturing initiative.  

One should resist the temptation, admittedly strong among his longstanding critics, to blame Modi himself for all of this. As I've argued before, India’s economic problems are structural, and the solutions depend on a frustratingly elusive convergence of factors.

It's not enough, for instance, for a government to be bold and inventive in order to invest successfully in manufacturing. Modi's ambitions must reckon with a multitude of external elements -- from unstable markets and banks laden with bad loans, to the likely rapid obsolescence of technology, to the mutable laws of the state itself.

Driven this way and that by electoral imperatives, the demands of foreign investors and charges of corruption and incompetence, the state is also undergoing -- and not just in India -- a profound crisis of identity and legitimacy.

This is why the honeymoons of incumbent governments worldwide have shrunk dramatically; restless voters want things to happen fast. Buffeted by such winds, national leaders have historically sought reliable sources of stability and legitimacy in nativism. It's in ideological populism at home that they can truly demonstrate their scope of action.

The example of Joko Widodo, elected to Indonesia’s presidency last year, is instructive. Faced with an adverse international climate -- the Indonesian economy is growing at its slowest pace since 2009 -- Widodo has taken to criticizing the West’s global economic order and to pressing an economically-nationalist agenda.

The approach flagrantly contravenes Indonesia’s need for foreign investment. But Widodo can rely, in the short-term at least, on the popular Indonesian distrust of foreign investors, which, seeded during the Suharto years, spiked after the East Asian crisis of 1997 and the subsequent years of environmental devastation and growing inequality.

Modi, who has also staked India’s growth on attracting greater foreign investment, cannot invoke economic nationalism beyond a point. In any case, cultural nationalism is a more natural option for the Prime Minister, a lifelong member of the Hindu nationalist Rashtriya Swayamsevak Sangh, which seeks to remake India into a proud and invincible Hindu superpower.

And while Modi himself has abandoned his incendiary rhetoric, Hindu nationalism has received a boost during his first year in office. Vigorous public campaigns to reconvert Muslims and Christians to Hinduism and to intimidate Muslims marrying Hindu women, as well as a steady drip-drip of anti-minority venom by Modi’s colleagues, including cabinet ministers, have steadily broken old taboos in public life.

Almost every week in the past year, some form of zealotry, such as the proposal to honor Nathuram Godse, the Hindu fanatic who murdered Mahatma Gandhi, has slipped into the mainstream. Authorities have accused not only Greenpeace but also the Ford Foundation of "anti-national" behavior. Know-nothing chauvinism -- manifested in claims that ancient Indians invented airplanes as well as plastic surgery -- has infected historical and scientific research institutes through Modi's appointments.

Only time will tell if this ideological reorientation of Indian society can succeed -- or, for that matter, if Modi can achieve his economic goals. But Modi’s devotees who now sigh remorsefully over his directionless government and alienated minorities are being either naive or disingenuous.

Aspiring nationalists frustrated by their inability to master the complex workings of global capitalism find it easier to identify and dominate adversaries at home. There should be no doubt that Hindu supremacism will continue, in the next four years of Modi’s tenure, to feed off the failure no less than the success of his economic ambitions.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Pankaj Mishra at pmishra24@bloomberg.net

To contact the editor on this story:
Nisid Hajari at nhajari@bloomberg.net