John Studzinski is Vice-Chairman, Investor Relations and Business Development, at Blackstone.
On Jan. 23, Narendra Modi, Prime Minister of India, will address a plenary session of the World Economic Forum in Davos. It is 21 years since an Indian Prime Minister attended the event. Leading his country’s largest-ever delegation at Davos, Modi will be determined to impress the influential audience with his government’s plans for the ‘New India’. In a world that is currently short of inspirational leaders, Davos could also be Modi’s chance to position himself decisively as more than a purposeful national figurehead. Over his time as Chief Minister of Gujarat and the first years of his premiership, he has shown that he is not afraid to put plans into action. The World Economic Forum is surely the ideal occasion for him to set out his broader vision for India.
The immediate purpose of his speech is to spearhead a campaign driven by India’s Department of Industrial Policy and Promotion, highlighting the huge opportunities that today’s India offers: its economy is forecast to expand by as much as 8 percent annually over the next four years and to be worth some $5 trillion by 2025, when its middle class is expected to number some 550 million. In February 2017, PwC predicted that India will be the world’s No. 2 economy by 2050.
Modi’s government is understandably keen to present India as an attractive destination for investors, and as a country already being transformed by the initiatives that he has driven since becoming Prime Minister in 2014. Notable among these are the Goods and Service Tax introduced in July 2017, and the adoption of a technology-driven transparent approach to doing business. The most dramatic manifestation of the latter was the decision to demonetise — and discourage a corruption-prone cash economy — with the controversial 2016 withdrawal of Rs 500 and Rs 1,000 notes.
The progress Modi has made has already been internationally recognised by rating agencies such as Moody’s and by authoritative indices. In 2017, India leaped 30 places (to 100th out of 190 countries) in the World Bank’s Ease of Doing Business rankings, while the World Economic Forum’s own Global Competitiveness Report ranked India No. 40 of 137 countries, its highest-ever position (it stood at No. 71 three years ago).
Modi’s declared philosophy of “Together with all, progress for all” chimes in harmoniously with the WEF’s theme for Davos 2018: “Creating a Shared Future in a Fractured World”.
That being said, Modi will be sensitive to the protectionist messages that are currently coming out of the White House, and acutely and competitively aware of the impression made by China’s President Xi at Davos a year ago, when he affirmed “China’s belief in an open and liberal global economic order”. Over the coming five years, India and China will be vying strongly for position as competitive, dynamic economies, with India tipped to take the lead when it comes to growth. For all that, China’s economy remains some five times larger than India’s, and the intricacies of India’s institutions and regulation can render policy-making frustratingly slow. But Modi professes a profound belief in the values represented by that cumbersome machinery. As he told Time in 2015: “If you were to ask me at a personal level to choose between democratic values on the one hand, and wealth, power, prosperity and fame on the other hand, I will very easily and without any doubt choose democracy and belief in democratic values.”
On a personal level, Modi is also the embodiment of some kind of ‘Indian Dream’ — his father ran a tea stall at a railway station and he freely admits that he experienced poverty as a child.
Above all, Davos 2018 gives him an exceptional opportunity, at a crucial moment in his premiership and in his country’s history, to make a case for himself as a leader who will transform his country, and by implication the world, in the longer term.
If he uses the occasion to make clear what he has accomplished over the past three-and-a-half years, he will also need to acknowledge (bearing India’s voters and a 2019 election in mind) what is yet to be achieved as his country enters a new phase as both a regional and global power.
Over Modi’s 13 years as Chief Minister of Gujarat, he enjoyed three successive election victories. The period brought substantial enhancements to his home state’s infrastructure, inward investment and manufacturing expanded, and the rate of state gross domestic product growth outstripped India’s as whole. While some commentators have compared him with the United Kingdom’s Margaret Thatcher, he modelled himself more closely on figures geographically closer to home: China’s Deng Xiaoping and, in particular, Singapore’s Lee Kuan Yew when it came to homing in on transparency, security, education, and jobs.
Gujarat’s population is some 65 million, while India, with its 29 states and seven union territories, is home to 1.35 billion people and clearly represents an immense challenge.
Over the past five years, the country has undoubtedly become a more positive place in which to invest and its stock market has performed well.
At Davos, Modi will be speaking to an audience, the ‘global elite’, which will be well disposed towards his efforts to propel India further into the 21st century by creating a transparent, market-efficient economy, while also taking a forward-looking stance on issues such as renewable energy. This ethos will remain less welcome to the constituencies back home which find ways of benefiting from long-entrenched corruption, exploitative supply chains, and tortuous bureaucracy.
There are some caveats, of course.
When it comes to managing this transformational process and the attendant influx of international capital, Modi will need to take a prudent approach to controlling growth.
International investors tend to have long memories if they feel that they have suffered from reckless use of their funds. As he changes the shape and balance of industry and the employment market, he would do well to take a leaf out of Angela Merkel’s German textbook, ensuring transparency in the handling of strategic sectors that rely on scientific innovation, in the way jobs are created and skills are rethought, and in the conduct of foreign trade. All these issues are manifest in the technology sector, in which India shares prowess with the United States: a collaborative approach between these two giants should be both encouraged and nurtured. More broadly, the relationships between India and the U.S. and between India and the European Union will merit as much attention as India’s role as a regional power in Asia.
Since 2014, Modi has set transformation in motion, but it is too soon to pass judgement on his achievements.
Just as the chief executive officer of a large company needs six to 12 years to create a legacy, so the leader of a large country needs more than one term in office.
Wherever he stands in the process, strong communication remains of the essence. The World Economic Forum is providing him with a prominent platform to excite and inspire global movers and shakers, over the coming weeks, months and years he must continue to inform and reassure the citizens of India about the significance of that vision — which is likely to disrupt the long-standing status quo — for them and their way of life.
Narendra Modi has a mammoth set of tasks in front of him. With his appearance at Davos, he stands both to enhance his reputation as a hands-on national leader and gain new respect as a much-needed global statesman.
As he functions on his multiple planes, no doubt engaging closely with the issues at hand, he will achieve the best results for India by delegating to people who are competent, trustworthy and fully representative of the country’s diverse constituencies.
In so doing, he will make clear that he does not subscribe in any way to the kind of reductive nationalism that has been asserting itself around the world in recent years: India, the world’s largest democracy, is a society rooted in ethnic and religious pluralism. He must present himself incontrovertibly as a leader who is not prepared to compromise his laudable, if ambitious, long-term objectives for the sake of short-term gains achieved through identity populism. He has already committed to achieving transparency, to combating corruption and exploitation, and to creating a more equitable financial and economic framework for his country. His Davos audience will admire him all the more for adhering to principles that will enhance India’s contribution not just to the global economy, but to the world’s geopolitical and moral order over the remaining eight decades of the 21st century.
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