Modi’s Mandate

WASHINGTON, DC – In an impressive exercise in democracy, 550 million eligible voters participated in India’s 16th general election. The new prime minister will be Narendra Modi of the conservative Bharatiya Janata Party (BJP), who presided over rapid economic growth in his 13 years as Chief Minister of the state of Gujarat, on India’s northwest coast. Modi won because most Indians believe that he can deliver more rapid growth in the country as a whole.

The election once again demonstrated how different in political terms India is from its giant neighbor, autocratic China. Now, however, the new government must try to match the superior economic progress that China has achieved over the last three decades. To do so, it will have to foster, in a different political context, two key ingredients of China’s economic success.

The first ingredient is a robust industrial sector composed of manufacturing industries that use unskilled labor, which would offer a route out of poverty for India’s hundreds of millions of rural laborers and their families. It is the route that China, and other countries before it, has taken. In India, by contrast, the underdevelopment of the industrial sector has kept the country from realizing its full economic potential.

The second ingredient is the infrastructure that all economic growth requires: roads, bridges, ports, and schools, as well as reliable supplies of electricity and clean water. Poor infrastructure constrains the industry that India does have. Factories need reliable supplies of power to operate effectively, good roads and railways to source inputs and distribute products, and, if they are to export those products, ports for cargo ships and airports for high-value items and business travel. China has these things in abundance. India does not.