Indian economic development, diversity and democracy.
When engaging with global investors, three key concerns often emerge regarding investment in India:
Valuations in India have consistently been high, reflecting the substantial growth potential of the Indian economy—a factor that a growing number of investors are willing to pay for. Additionally, India commands a premium due to its stable democratic regime and stronger adherence to the rule of law, distinguishing it from China.
Concerns about corporate governance and reporting are prevalent. However, from my experience, well-managed Indian companies are of international caliber, steered by disciplined leadership. I am confident in countering any corporate scandal in India with examples like the ENRON or Volkswagen emissions scandals.
With the Indian economy's continued growth, there is increasing skepticism about the future of India's democracy and its tradition of diversity, particularly with the possibility of the BJP securing a third term with an expanded majority.
This concern has always been perplexing to me. Even if the apprehensions regarding the current government are justified (Le Mond Diplomatique offers a current rendition), the feasibility of establishing a dictatorship in such a vast, diverse, and complex society seems unlikely, as evidenced by Indira Gandhi's failure.
The lack of a solid analytical framework has often left this intuitive sense unexplained. I believe that VS Naipaul’s epic India: A Million Mutinies Now provides a handy framework.
In his narrative, Naipaul intricately details some key transformations of India post-independence. In essence, the country's economic growth and the political empowerment of various communities unleashed long-suppressed identities. Naipaul notes that “These disruptive, lesser loyalties – of region, caste, and clan – now played on the surface of Indian life.”
These 'revolutions within a revolution' Naipaul explained, took place among the so-called untouchables or Harijan communities and the Shiv Sena movement that he observes in Maharashtra, as well as among the non-Brahmins in Karnataka (administration) and Tamil Nadu (Periyar and the Self-Respect Movement), Punjab and Bengal.
Despite being published in 1989, his book captures the enduring essence of India, where identity is crucial for navigating life. Naipaul explains: “In the torrent of India, with its hundreds of millions, where the threat was of chaos and the void, that continental idea was no comfort at all. People needed to hold on to smaller ideas of who and what they were; they found stability in the smaller groupings of region, clan, caste family.”
Naipaul makes another powerful argument. These multiple revolutions not only created winners (Dravidians) and losers (Brahmins) but also inspired others (lower castes) to strive for more. Writing about Tamil Nadu, he argues: “Below those middle casts, now triumphant, there were, as always in India, others. They, too, had been shaken up; they too had begun to stake their claim.”
India thus presents endless opportunities for political parties to engage with voters.
The BJP's recent political triumphs are rooted in instilling a heightened sense of national pride and self-confidence among many Indians. Moreover, under the leadership of the BJP and Narendra Modi, India has witnessed several technological and political transformations. The OBC communities have emerged as one of the principal beneficiaries over the last decade.
Confidence and economic advancement fostered identities and aspirations since Naipaul's journey and continue to do so. Since the publication of Naipaul's book in 1989, India's GDP has expanded from $296 billion to over $3.4 trillion. The virtuous cycle described by Naipaul has thus only gained momentum.
The ruling party has vigorously promoted a narrative of substantial economic growth, leading to the emergence of winners and perceived losers. A growing number of individuals and communities are striving for more, and addressing these aspirations is crucial for political success. Regional parties are the plausible political beneficiaries and set to become an increasingly significant counterbalancing force in India.
Despite warnings that India is yielding to centripetal forces, history indicates that centrifugal forces will persist in shaping and propelling India forward. The expanding Indian economy will support this movement, and social media will further enhance these trends.
Rama Bijapurkar observes in Lilliput Land that "India is undergoing a process of increased fragmentation." She suggests that an archipelago serves as a useful metaphor for understanding India. She notes that India is “many islands floating in the same sea, subject to similar waves, but responding according to their own individual history and geography.”
India's remarkable journey is far from over, and the dividends of its democracy and diversity will match its growth dividends for many years ahead.
Well articulated Gary!
Businessperson. Professional. Angel investor.
10 个月Well written, as always Gary Sussman
Founder of Beacon & Vice President at Global Impact Partners
10 个月I think one risk to this that's dramatically under-appreciated is the BJP's interest in implementing "One Nation One Election" (ONOE) which would seek to have a single set of Federal and state elections every five years. At the moment the ongoing calendar of elections serves as an effective check on any governing party. The next election is right around the corner, and this often prevents them from implementing anything too controversial. Take the BJP's interest in establishing Hindi as the universal "second language" across India. One of the reasons, in my view, they haven't moved towards this is because they continue to hope to do well in state elections in the South of India, where such a policy would be anathema. (It is, in fairness, and to the BJP's credit that they still seek to be a pan-India party, rather than dismiss half of India as filled with "deplorables" or the like). In a world where they were guaranteed not to have to face the electorate for another five years, they'd be a lot more willing to push controversial bits of the agenda. (1/3)