Modi’s three big gambles: We’ll soon know if demonetisation, GST and Adityanath damaged BJP’s re-election prospects

Narendra Modi did not storm to power four years ago with a reputation for caution. At least in this limited sense he has partly lived up to advance billing.

Uday Deb

Measured by their riskiness, three decisions in the prime minister’s tenure thus far stand out. Should BJP lose next year’s general election – an unlikely but increasingly plausible outcome – pundits and politicians alike will pore over the impact of demonetisation, the nationwide goods and services tax, and last year’s surprise elevation of Yogi Adityanath to lead Uttar Pradesh.

On the face of it, the three moves are hardly alike. Demonetisation and GST are economic policies of widely varying pedigree: the former a harebrained idea cooked up by cranks, the latter a product of broad technocratic consensus. The appointment of Adityanath to helm India’s largest state is ultimately a political gambit.

Nonetheless, all three decisions share one thing in common: impact. You may jeer at them as foolhardy or praise them as visionary, but if you’re in India and have a pulse the odds that you’re unaware of them are vanishingly slim. In political terms, they are high stake bets that have the potential to pay off for Modi in comfortable re-election, but equally to backfire in flaming defeat.

Ranked in order of foolishness, demonetisation, the 2016 decision to suddenly vapourise nearly 90% of India’s cash by value, has to come first. Arguably, no policy in the past 25 years has been as poorly conceived or clumsily implemented. Nor has any single act done more to damage Modi’s hard-won reputation as a safe steward of the economy.

Before demonetisation, Modi was widely viewed as having won the battle over economic modernisation in BJP and the wider constellation of Hindu nationalist outfits spawned by the Rashtriya Swayamsevak Sangh. After demonetisation, you could no longer make that case without caveats. At the very least, assorted yoga gurus, amateur economists and outright cranks still have a seat at the policy table.

Like demonetisation, last year’s anointment of Hindu monk Yogi Adityanath as chief minister of the country’s most populous state came as a bolt from the blue. Nobody doubted the five-term parliamentarian’s electoral appeal in the badlands of eastern Uttar Pradesh. But his incendiary speeches targeting Muslims and reputation for violence, including the standing up of a private militia, the Hindu Yuva Vahini, appeared to place Adityanath beyond the pale of high office.

Some of Modi’s aides and well-wishers appeared to understand the import of handing the reins of Uttar Pradesh to someone who had just recently been viewed as too extreme to be appointed even as an obscure minister of state. They quickly put out the word that Adityanath had not been the prime minister’s first choice, but that Modi’s hand had been forced by BJP state legislators.

Regardless of the veracity of this story – implausible in the face of Modi’s outsized contribution to BJP’s crushing win in the state – Adityanath’s appointment marks another watershed. At one point, Modi could downplay following foul-mouthed trolls on Twitter or remaining silent when cow vigilantes attacked innocent Muslims on the mere suspicion of eating beef. But handing Adityanath the throne in UP, effectively pole vaulting the 45-year-old to a short list of possible future BJP leaders, makes it much harder to argue that power will moderate the party’s most feral instincts.

The final gamble, the goods and services tax rolled out last year, is much more of a mixed bag. Many economists believe that on the whole the benefits of knitting India into a single market outweigh the teething troubles associated with the new tax.

Nonetheless, on Modi’s watch India has rolled out the world’s most complex GST with the dubious distinction of also boasting some of the world’s highest rates. Even if the kinks in the system are ironed out over the medium term, BJP heads into the general election with many small businesses drowning in red tape and exporters worried about jammed tax refunds.

Not everyone will be willing to live with the vague hope that at some point India’s GST – currently the virtual opposite of the “good and simple tax” it claims to be – will come to resemble its sleek single-slab counterparts in more advanced economies.

Will Modi’s gambles backfire? For now they have clearly given the opposition ammunition that it otherwise lacked.

Initial euphoria about demonetisation has given way to a realisation that a promised windfall from it failed to materialise. Anecdotal evidence also suggests that many social moderates and economic liberals who had gravitated toward BJP during the Vajpayee era have been repelled by the party’s more strident face. A string of by-election losses in the Hindi heartland over the past few months underscores BJP’s struggle to retain ground it won four years ago.

Of course, it’s also possible to read things differently. Many die-hard BJP supporters view demonetisation as a bold move to cleanse the economy of black money, GST as a big step toward greater simplicity in taxation, and Adityanath as an incorruptible harbinger of a no-nonsense Hindu renaissance.

In short, the proverbial jury is still out on how voters will view Modi’s three big gambles. But love them or hate them, you cannot possibly claim that they do not matter.



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