Narendra Modi now embraces inclusive growth

When Narendra Modi outlined his economic vision in Delhi, it made a lot of sense. India needs infrastructure —which must be reimagined to include a broadband network, apart from roads, power, ports and railways — and innovation, development must reach everyone and must give equal importance to agriculture, industry and services.


This has been making sense for a long time, certainly over the last decade when the UPA has been running the government. The vision that Modi presented is pretty much what the UPA has dubbed inclusive growth. What Modi brings to the table is a promise of vigorous implementation, of being a doer, of being a leader with a broad vision of growth, a sense of purpose and energy in getting things done.

Modi did offer something new: an emphasis on states playing a bigger role and transforming development into a popular movement, the way Gandhi transformed the freedom struggle.

Both these sound appealing but are problematic. Development is like prose — people do not consciously set out to speak prose or do development. Economic agents go about doing things that make sense for themselves and the invisible hand of the market, guided where necessary by sensible regulation, coordinates such pursuit of individual gain into collective development.

Federalism is something that already exists. States are mostly free to do what they please, something Modi himself admitted when he said that foreign investors come straight to Gujarat, without bothering to waste time in Delhi.

That several states have opposed foreign direct investment in retail is testament to both operative federalism and to political dissembling. The BJP extols foreign investment while selectively opposing it in retail, just as it has thwarted the UPA’s attempt to adopt a goods and services tax but welcomes it in principle. And politics, ultimately, circumscribes all economic policy. This is where the Sangh Parivar’s felicitation of Muzaffarnagar’s riotaccused MLAs stands in stark contrast to an economic vision that is inclusive.