The devotes from a Hindu temple in Ayodhya, the mythical birthplace of the god Ram, on January 22, a major religious event took place in India. It also had political significance. It was chaired by Prime Minister Narendra Modi and marked the unofficial start of his Bharatiya Janata Party's campaign (BJP) before the general elections in April and May. It also turned into a business jamboree. Among the attendees was a “Who's Who” of India Inc, from the executives of the country's most powerful conglomerates to the founders of its sexiest startups. Everyone came to pay tribute to Ram, but especially to Mr. Modi.
Some business guests came because of their genuine appreciation for his management of the economy. Others came forward out of fear that if they didn't, they and their companies might find themselves fending off tax inspectors or having difficulty obtaining business permits from a government that critics accuse of creeping authoritarianism. This strange mix of feelings reflects the business world's attitude towards India's enigmatic strongman.
Businesses certainly have a lot to be grateful for. During Mr. Modi's tenure, which lasted ten years GDP has grown faster than most major countries. In the third quarter of 2023, it increased by 7.6% year-on-year. Foreign direct investment rose from $24 billion in the year before Mr Modi's election in 2014 to more than double the average over the past three financial years (see chart 1). On January 22, the Indian stock market surpassed that of Hong Kong to become the world's fourth largest stock market by market value.
All this is not the work of Mr. Modi. India, for example, has benefited from Western companies' efforts to diversify their supply chains away from China. But bosses also give credit to his policies. The deployment of a national digital platformIDENTIFIER This program has fueled a boom in digital payments and e-commerce. A national tax on products and services (GST) replaced a confusing patchwork of state levies. The financial sector went from crippled to robust in a decade and the government turned talk of privatization into action, including selling Air India, the long-suffering national airline.
Economists debate the merits of protectionist measures such as higher tariffs and “production-linked incentives” (FOLDs) to promote manufacturing, on which the state is spending $26 billion over five years – but businesses love them. Christopher Wood of Jefferies, an investment bank, predicts that if the BJP If we lost the election, the stock market would fall by 30%.
Manufacturers do not hesitate to express their adulation. Two weeks before making the pilgrimage to Ayodhya, the heads of India's three biggest conglomerates worshiped Mr. Modi at a jamboree in his home state of Gujarat. Mukesh Ambani of Reliance Industries called Mr. Modi “the most successful prime minister in Indian history.” Tata Sons' Natarajan Chandrasekaran spoke of Mr Modi's “visionary leadership”. Gautam Adani of the Adani Group praised him for setting “a benchmark for a more inclusive world order”. Lesser business figures zealously echo these sentiments, ideally within earshot of government officials.
In private, the praise is more reserved. Business leaders appreciate Mr Modi's willingness to listen to them. He often shows up in person at business parties, which have multiplied under his watch. Behind closed doors, he meets not only big bosses but also more modest executives. Heads of regional and Indian multinationals report that during these hearings, he listens attentively, asks intelligent questions and never seems distracted or bored. They feel free to give him their unadulterated opinions on politics, which he accepts even if he then feels free not to put them into practice.
He is also seen as personally incorruptible – a welcome exception to India's venal politics. Some businessmen complain that the government is making life easier for national champions, such as Reliance and Adani Group. But they admit that these groups invest in areas such as telecommunications, energy and infrastructure, all of which India needs, and that their relatively meager financial returns do not scream cronyism. When leading companies stumble due to mismanagement, Mr. Modi does not step in to save them from insolvency. This includes companies run by people considered close to him, such as Mr Ambani's brother Anil, who ran a rival conglomerate, and the Ruia family, owners of Essar Steel.
Mr. Modi also opened the doors to foreign countries, the bosses recognize. He took advantage of his recent mandate as president of the g20 clubs from major economies to promote themselves – but also to promote their country. It has established stronger ties with America, Israel, Saudi Arabia and the United Arab Emirates. Indian financiers and executives say they can now meet with American, Arab and European bankers who, a decade ago, would have ignored their calls.
The criticisms come in more subdued tones. India GDP per person rose rapidly under Mr. Modi by emerging world standards, but grew even half as fast under his predecessor, Manmohan Singh of the Congress party, who also governed for ten years. Stock returns have also been lower over the past decade than in the previous decade (see chart 2). India may be experiencing a resurgence, but the official measure of business investment as a share of GDP is not (see table 3).
Many of Mr Modi's most successful policies, such as digital IDENTIFIER and the GST, were first proposed by Mr. Singh's government. Some taxes are lower but, with the exception of GST, no less Byzantine. The 73-year-old prime minister has no obvious successor. Even if he remains lively, his possible departure could therefore lead to political instability that companies prefer to avoid.
Such concerns come up again and again in conversations with business figures. None want to be quoted. One reason for public silence is as old as the Indian state: a relationship with the government can help businesses cut through impenetrable red tape; the lack of such a system can leave them at the mercy of bureaucrats. Another reason is new, specific to that of Mr. Modi BJP, and spoken in a low voice. Criticism, businessmen murmur, can invite retaliation. This may take the form of an investigation by the Department of Revenue, the Serious Fraud Investigation Office or the Central Bureau of Investigation. These may be issues that date back several years, making defense more difficult and costly. For many luminaries at India Inc, remaining in the government's good graces has gone from desirable to existential.
Fear of not receiving favor
A tycoon last openly expressed such concerns four years ago. Rahul Bajaj of the Bajaj Group, another conglomerate, told Amit Shah, Mr Modi's home affairs minister: “You are doing a good job, but despite that, we are not sure you will appreciate it when we openly criticize you . Intolerance is in the air. Under Mr. Singh, by contrast, the government was a fair target. Mr. Shah responded that “no one needs to be afraid…we haven't done anything to worry about.” [with respect to] any criticism.” “If someone criticizes,” he added, “we will consider the merits of it…and make efforts to improve.”
Bajaj died in 2022, aged 83. Since then, no other major business leader has echoed him publicly. In the eyes of his industrial colleagues, Mr. Modi and his government are still doing a good job. But intolerance is still in the air. ■
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