What do India’s Prime Ministerial candidates mean for its economy?

Not many Prime Ministers in the world face the gigantic task of managing a country of 1.2 billion people, where ethnicities, cultures, mindsets and mannerisms change every few kilometers.

Would a decentralized management style or an autocratic style be better to govern India? Kejriwal has advocated empowerment of decision-making and functioning to the grassroots-level blocks (Gram Sabha). This would bring the people directly into the governance process.

It might mean development effort is better directed, leakages are minimized and benefits address the region’s need.

In Kejriwal’s model, local communities would have a role in managing the region’s natural resources, get revenue-sharing and a say in the displacement of people. But the challenge is operational success, as implementation can get delayed due to in-fighting among members of the local community.

In contrast, some believe Modi to have an autocratic style of management. Whether this is baseless or merits discussion is separate, the question is would an autocratic style be more apt to stabilize a ship which is currently in a crisis.

Currently, it is imperative for the economy to get on track and excessive decentralization might just delay that process. But autocracy also has another side. Opinions of critics might not get an ear and dissent might not be tolerated.

For example: media reports allege land was given to big industrial houses at subsidized rates in Gujarat. If this is indeed true, it indicates the land owner either received minimal compensation for his asset, or the State put itself in fiscal pressure if it compensated the owner separately.

But the other side of the coin is that it is equally important to get big businesses to invest into long-term commitments as it creates jobs and demand for ancillary products/raw materials – critical for economic growth.

As far is Gandhi is concerned, the UPA regime had set up a National Advisory Council to achieve its agenda. However, this council is believed to have largely failed as it spent on non-asset creating social projects without enhancing economic opportunities, despite creation of empowerment across the social strata being an essential need for India.

Credibility of ultimate delivery is where Modi’s track-record outranks that of Gandhi and Kejriwal, especially when the Indian economy is undergoing its worst crisis in recent years. Modi’s work in converting Gujarat into one of India’s most developed states (across industry, agriculture and services) has built this credibility.

In contrast, the depth of Gandhi’s involvement in the UPA between 2004-2014 has been unclear, and the opinion of some is that he might still be inexperienced for the top-role.

There is a similar issue of experience-deficit that people opine about Kejriwal, especially after his rather abrupt end to his position as Delhi state’s Chief Minister, within 49 days of rule in January-February 2014.

What Gandhi and Kejriwal are missing is a track-record of demonstrated achievements, which Modi has tactfully built over the last decade and is now leveraging to build his credibility for the role of Prime Minister.

When the economy is in crisis, there seems to be a human tendency to repose faith in experience. However, there are interesting observations regarding his Gujarat track-record as well.

Growth rates in state-wise net domestic product shows Maharashtra, Delhi, Tamil Nadu and Haryana did just as well during the last decade – even bettering Gujarat in some cases.

Rajasthan and Bihar bettered Gujarat in Industrial sector in last four years. Rajasthan, Bihar and Madhya Pradesh beat it in Agriculture, while Bihar, Haryana, Maharshtra and Madhya Pradesh beat it in Services.

In conclusion, the challenges for any of the three candidates are immense. India might very well need a dose of each of the three, but it will only get one of them as a leader. The winner’s responsibility will be huge.

The author works with a leading capital markets company in India. Views expressed are entirely personal and do not represent those of any entity.

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