Samaj, sanskar and the stock markets

I have spent a decade analysing the economic model of Narendra Modi, and a few things are distinctive. The Modi model represents, as an upcoming book of mine calls it, capitalism with Indian characteristics.
This was apparent even in 2019 when I wrote one of the early papers arguing that far from being blindly capitalistic, Modi is building a new welfare state model in India. This has now become an established argument about the economics of the Modi era.
But there is a deeper study needed to understand the philosophical reasonings due to which Modi—who had been seen as a staunch friend of Big Business as the host of the successful Vibrant Gujarat business summits during his time as Chief Minister of Gujarat—had made welfare-ism a frontline element of his governance model.
In the world of the Rashtriya Swayamsevak Sangh (RSS), which Modi joined as a boy, the most important factor is samaj or society. It is often said everything fundamentally stems from what society will or will not accept. The RSS has no immutable principles, it always wishes to remain in tandem with what is accepted by samaj. Now what is accepted by society is a bit of an amorphous concept except perhaps for an organisation which has spent nearly a hundred years studying, and keeping pace, with society. After all, the best wisdom about society is perhaps gathered by being part of it for a long time. This is why a lot of the economic advice from the RSS annals, for instance on the need to chart a “middle way” between capitalism and communism, sounds like solid pragmatic fare, nothing extreme and something that samaj might see good in. After all, if the samaj rejects something or is unhappy with something, disruption is inevitable. Also, samaj includes antodaya or the care of the most underprivileged, or the Gandhian last man as it were.
Therefore, the key insight of Prime Minister Modi’s economics is to ensure that large numbers of people are given fundamental support to ensure life and livelihood. This is not merely dole, this is the only way that the Indian economy can continue to grow, without disruption, even as it makes a technology and productivity transition (which by its very nature is disruptive).
As a technology-enthusiast, Modi was early in seeing both the empowering force of technology and areas where it could impact family earning. He also understood that while business spoke about “ease of doing business”, the average citizen was impeded and obstructed by governmental overreach at every step. Therefore, his policies of making things easy for business to flourish went hand in hand with making things easier for the common citizens—so more than 2,000 laws, many remnants from the British era were removed, and despite early scepticism, the government pushed through plans to introduce a digital payment platform (Unified Payments Interface) which is now recognised as one of the best in the world, and plays a role in ensuring a level playing field between companies like Google, PhonePe, Paytm and others for the benefit of users.
There is also a realisation that India’s growth story fuelled by technology would require support for many people to help them effectively make the transition—but this can only be achieved if holes were plugged in the delivery of cash support to those in need. Therefore, the direct benefit transfer system is built atop a digital network which allows for the money to be directly transferred to the bank accounts of the beneficiaries without all the traditional losses due to graft and inefficiencies. This entire system was once mocked as “would farmers buy and sell and receive money through a mobile phone” by a previous finance minister. But it has been India’s consistent experience that it is the less privileged who embrace technology faster than anyone else because it makes an immediate, valuable, profitable difference to their lives. Infrastructure which India is building has a more potent multiplier effect than many kinds of handouts.
Though handouts, like direct benefit transfers, too are urgently needed. If there is one lesson that the Indian government perhaps took from Covid, it is that support is needed at the grassroots in large volumes and with extreme efficiency. This lesson is turning out to be particularly useful as India, apart from other transitions, also looks to make an energy shift to renewables even as it bears the brunt of some of the worst heat waves on the planet across its territory.
Therefore, the elaborate model of social security, from cash distribution to easier and better access to pensions, strengthening healthcare, improving delivery, and building infrastructure is both a cushion and preparatory work.
This focus on welfare delivery ensures protection for those who need it to face what are often a little too casually termed “market forces”, and it is also preparatory work for the difficult period that is coming, not merely during the global recession that is starting to unfold, but more crucially it does the groundwork for the climate change crisis that is unfolding.
India has a unique opportunity and a unique problem. The planets have never been more aligned for its swift growth, but this growth will have to come during a period of unprecedented global and domestic turmoil from several issues including climate change.
Therefore, Indian capitalism will have to be extra cautious about taking along its large population, now the largest in the world, its diverse and eclectic samaj, which is ever cautious about its traditions, its sanskar. It is now clear, whether from the success of khadi (in 2021-22), or the steady Indianisation in the menu of every international fast-food brand in the country that domestic demand for authenticity is growing exponentially as the country decolonises and becomes unapologetic about itself.
The experience of the Modi years, till now, has validated that any uniform model of globalisation, or capitalism, cannot and should not be cut-and-pasted from country to country. Cultural differences matter and they, more than anything else, determine the response of a market.
Therefore, even the word “reform” must be understood in context. Eliminating all forms of social support is not reform, neither, for instance, is attempting to bring India at par with America’s abysmal history of barely (at an average) offering any paid maternity leave. This would not work in India where the idea of motherhood is one of the most influential social values. While rapid urbanisation is valued as a key to greater growth, India has an attachment to its villages and its experience of urban squalor is not necessarily confidence-building about depopulating its village economies. So far from keeping villages in digital darkness, the rapid spread of broadband means that a majority of internet users in India are from non-big communities and its startup ecosystem is not concentrated to its metropolitan centres but is increasingly distributed across its geography.
Therefore, Indian capitalism and growth must grow in keeping with India’s samaj and sanskar values, and the Modi model of capitalism with Indian characteristics has been all about keeping this in mind. It is important to recognise that this is the underlying logic of the Modi welfare state.