There are four roads India can take

The rational people who voted for Modi had two plausibly legitimate arguments.

The first was that coalition politics of parties with differing ideologies had created a policy paralysis and we needed an authoritarian leader with majority mandate to cut through the impasse and take decisive action. The second was that large amount of money were being spent on ineffective subsidies that were distorting capital markets and making them inefficient reducing GDP growth rates.

But is it true that countries with authoritarian leaders and smaller government intervention in markets perform better?

To see if the data backs this up I mapped countries onto a chart using the press freedom index as a proxy measure for authoritarian top down vs. democratic bottom up culture and I used government spending as a percentage of GDP as a proxy for level of government intervention in markets.

Government spending as % of GDP mapped against Press freedom index ranking

By looking at the chart above it became clear that there are prosperous successful countries that have adopted very different strategies. The Scandinavian countries on the top left of the chart (Denmark, Sweden, etc.) have very high press freedom and they have very high government spending as a percentage of GDP. At the other end of the scale, a country like Singapore on the bottom right of the scale has very low press freedom and the government spending as a percentage of GDP is also very low.



As I looked at the graph four competing visions of India started emerging which I have mapped more simply in the white chart below (repeated for easy visual reference):

Economic vs political freedom

The Dragon road

The first vision is what I call the ‘Dragon road’, and is the one that many b-school corporate executives seem to subscribe to in India today.

First stop on the dragon road is to ape China’s success formula — centralize decision making authority and clamp down on needless dissent, invest in infrastructure, reduce subsidies and taxes and government expenditure (from India’s 27.2% to China’s 23.9% of GDP), and allow unleashed businesses and entrepreneurs to deliver growth and prosperity.



However, this group would balk at the thought of giving up freedom for money in the long term. Most of them want a ‘benign dictator’ for a short period. Not many define the time frame but if we grow at 10% and China grows at 8%, with our starting point of $1.7tr and China’s starting point of $8.2tr it would take 86 years for us to catch up with them. If we grew at 12% and China grew at 6% it would however take us only take us around 30 years to catch up. Let’s assume the Sangh corporateship they envisage will last somewhere in between — 50 years.



After overtaking China, half a century from now, those who would have us step forward on this route would look to reach the next step on the Dragon road — Singapore.

This would require a slight reduction in authoritarianism and even higher reduction in taxes and more capitalism.

And finally since Indians do like to debate we would reduce the authoritarianism even further and move towards the free market heaven of Hong Kong.

The saffron road



Of course the danger is that if the Sangh dictatorship does last 50 years and they don’t reduce government expenditure, as has happened in the last five years of Modi’s term, and is likely to continue for the next five, all we will be left with is increasing authoritarianism with an increasingly nationalist and then possibly increasingly religious feel.



The first step on the saffron road is Russia, with it’s hyper nationalism.

On this route, Modi becomes a Putin like cult figure curbing press criticism, locking up the Indian version of Pussy Riot and social media dissenters. Russian nationalism is of course accompanied by the constant suspicion of western interests and NGOs and the transformation of the state from a democracy into an oligarchy run by a few large corporates.

There are many warning signs of this happening in India at the moment.



The next step on the Saffron road is away from secular Russia to Erdogan’s Turkey where nationalism and religion go hand in hand and the secularists are under attack for being both anti-national and anti-religion. Crony capitalism is rife as are corruption scandals and the leaders occasionally demand the banning of twitter to stop non-state media run channels from causing too much discomfort to the ruling party.



The final stop on this road is the saffron version of Saudi Arabia.

Although Hindutvadis would regard this as the ultimate insult, of course the Hindu rashtra vision of India, is no different from the Hindu equivalent of Sharia Saudi Arabia.

Here the ministers will ban short skirts, pub going, cow slaughter, Hindu texts will be taught in school along with saffronized history and science, forced singing of singing Vande Mataram and the ubiquitous cry of ‘Jai Shree Ram’.

Muslims and Christians will undoubtedly be subject to many human rights violations and in this eventuality, just as minorities suffer persecution in many authoritarian Islamic countries.

The socialist road



Another vision of India is the now discredited Socialist road — marked on the diagram in green.

This route actually has the government take control over more of the GDP so we go from our government spending as a percentage of GDP of 27.2% to Israel’s 44.6%.

High government spending can lead to control of large amounts of power in the hands of government officials, which can often lead to high amounts of corruption, nepotism and lethargy (BJP supporters will mutter that it’s hardly surprising the road will take us through Sonia’s Italy where the government spending is 49.8% of GDP).

But with increasing education of the backward classes, those who would propose the Green road would argue that we would eventually move towards being an egalitarian, liberal and prosperous welfare state like Sweden.

The humanist road



The vision of India that I personally subscribe to is the ‘humanist road’ in blue on the diagram.

Humanism has two components — evidence based rationality and compassion.

The focus is on education on the first part of this route and the first step takes us to Japan.



Japan, like India is a conservative patriarchal nation. However they responded to western Imperialism in a very unique way. When they first came across Christian missionaries they realized that westernization had the ability to destabilize the culture and autonomy of their nation and so they banned foreigners from the country, virtually shutting out foreign influence for 250 years under the sakoku policy from 1639 onward (something that RSS members probably wish had happened to India).

However the forced isolation meant that Japan fell behind the western powers technologically and when they realized and acknowledged this they developed a subject called Rangaku (literally ‘Dutch education’). Instead of running away from westernization, during the Meiji restoration in 1868, the Japanese actively learned science and technology and this laid the foundations for their technological, economic and military strength where they became equal if not superior to many of the European powers.



As we continue to focus on science and education, it is likely that India’s plurality and diversity will make us more like the liberal US than conservative and homogenous Japan.



The second part of the road is focused more on compassion than truth, as we move up from a prosperous state with extremes of incomes to one in which we use our increasing wealth to build a greater safety net for our most vulnerable citizens.

Here the taxes rise and state expenditure as a percentage of GDP rises from USA’s 41.6% to UK’s 48.5% and finally Sweden’s 57.6%. This is required to provide free access to world class education and medical facilities to every one of our citizens so that we can have a truly egalitarian society where any Indian can have the same opportunities as any other, independent of the circumstances of their birth. Of course, this journey is a hundred years long too.

There are no easy answers or easy solutions.

Which road should we take.



Of course it’s not like education or prosperity is a sole preserve of the Humanist road. Singapore, down the Dragon road has world class levels of education comparable to any of the Nordic countries.

However I notice that the happiest, most prosperous and freest countries in the world are the Nordic countries with the highest levels of tolerance for debate and the highest levels of government spending as a percentage of GDP — opposite to the direction that Modi’s supporters believe we should be heading towards.



We could become the capitalist heaven of Hong Kong, the Hindu rashtra equivalent of Saudi Arabia, the prosperous and culturally ‘pure’ Japan, or the humanist utopia of Sweden.



Which road would you take?