We have been remiss in not noting the most important event of the last week: India’s election, which resulted in a landslide victory for Narendra Modi’s Bharatiya Janata Party. Bharatiya Janata won an absolute majority in India’s Parliament, so Modi will not only be installed as India’s new Prime Minister, he will be able to implement many of the policies on which he campaigned.
While India’s circumstances are unique, to say the least, Modi can be seen as that country’s Margaret Thatcher. India has long been hampered by its bizarre caste system and tradition-bound culture. On gaining independence, India did the one thing that could make its economy even more sclerotic, by adopting would-be socialist policies. India’s underdeveloped stage was thereby needlessly prolonged.
That India has historically failed to attract much foreign investment is a symptom of a much larger problem: the country’s byzantine regulatory state makes it almost impossible to get anything done. One need only look at the extraordinary success that Indian-Americans have achieved to imagine the progress India will make if it sets its people free. That is what Modi proposes to do.
Like Thatcher, Modi was not born to prominence. The Associated Press describes him as “the son of a poor tea seller.” This is a big change in India, where the Congress Party, dominated by the Nehru and Gandhi families, has long misruled. Needless to say, liberals in the U.S., as in India, hate the fact that Modi has worked his way up from poverty.
Modi is also committed to the American alliance that George W. Bush helped to cement. There are many reasons why American and other Western investors should prefer India to China, if Modi is able to reform India’s government-dominated economy. If he succeeds, the result may be an explosion of productivity and human progress with few historical precedents.