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21 December 2012,

Modi: Move to the middle

Growth at any cost is the dominant political theme across emerging markets, and Narendra Modi's victory in Gujarat proves that yet again. But is that policy good enough to make him prime minister of India one day? Gateway House's Sambuddha Mitra Mustafi blogs.

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Once again in an emerging market a political leader has triumphed by making people richer – defeating an opposition that claimed he is an autocrat. Narendra Modi’s victory is not a stand-alone “Gujarat model” – this is the model that is visible today in Russia, Turkey and China. In countries where materialism has been unleashed after decades of self-effacement and slow economic grind, wealth is the new standard of achievement.

Narendra Modi grasped this narrative, and thrived on it. It also has a very sound economic basis in today’s India.

In the free market, like in the casino, it takes money to make money. With per capita GDP now close to Rs. 75,000 ($1500), the average Indian is lower middle class. She is poor enough to grow quickly, and rich and confident enough to consume, invest, make some capital gains and aspire to break into the real middle class. If she is 25 years old – the average age of India – she is also impatient.

This materialistic, growth-hungry streak of the middle Indian will continue to grow till it reaches per capita GDP levels of between Rs. 3 lakhs to Rs. 5 lakhs ($6000 – $10000). That is when growth will likely to take a back-seat to cashing in on social security, coupled with a middle-class complacence. At least till then, Modi’s model of growth at any cost, is likely to be the dominant political theme in India.

However Modi’s path to being prime minister of India is far from certain. Much like former Chongqing mayor Bo Xilai who was also a middle class darling for his can-do spirit (authoritarian according to critics), Modi’s unabashed desire for the top job and his personality cult, has many detractors within his party and his allies. And while Modi has captured the economics well enough by playing to the middle class Indian, he needs to recalibrate his social agenda towards the centre to become acceptable beyond his fief of Gujarat.

The world is replete with politicians who went too far down one-wing on social issues to suit a constituency and could not track back far enough to gather the middle votes at crunch time. Mitt Romney’s primary speeches cost him; Lal Krishna Advani could never shake of the hardliner tag; Bo Xilai’s Mao revivalism made him suspect within his own party.

For inspiration, Modi should look at Atal Behari Vajpayee, the only prime minister from his party and who knew well his path: that the way to the top is down the middle.

Sambuddha Mitra Mustafi is a Senior Researcher at Gateway House: Indian Council on Global Relations.

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