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The consecration of a Hindu temple in Ayodhya, the mythical birthplace of the god Ram, on January 22nd was a huge religious event in India. It carried political significance, too. It was presided over by the prime minister, Narendra Modi, and signalled the unofficial start to the campaign of his Bharatiya Janata Party (BJP) ahead of a general election in April and May. It also turned into a business jamboree. Attendees included a “Who’s Who” of India Inc, from the heads of the country’s mightiest conglomerates to founders of its sexiest startups. All came to pay tribute to Ram—but mostly to Mr Modi.
Some corporate guests came because of genuine appreciation for his stewardship of the economy. Others showed up out of fear that if they didn’t, they and their businesses might find themselves fending off tax inspectors or struggling to secure business permits from a government that critics accuse of creeping authoritarianism. This odd mix of sentiment reflects the business world’s attitude towards India’s enigmatic strongman.
Businesses certainly have a lot to be grateful for. During Mr Modi’s decade-long tenure GDP has grown faster than it has in most big countries. In the third quarter of 2023 it roared ahead by 7.6%, year on year. Foreign direct investment went from $24bn in the year before Mr Modi’s election in 2014 to more than double that on average in the past three fiscal years (see chart 1). On January 22nd India’s stockmarket overtook Hong Kong’s as the world’s fourth-biggest by market value.
Not all of this is Mr Modi’s doing. India has, for example, benefited from Western firms’ efforts to diversify supply chains away from China. But bosses also credit his policies. The roll-out of a national digital-ID scheme has fuelled a boom in digital payments and e-commerce. A national goods-and-services tax (GST) has replaced a baffling patchwork of state levies. The financial sector went from crippled to sturdy in ten years and the government has turned talk of privatisation into (some) action, notably selling Air India, the long-suffering flag carrier.
Economists debate the wisdom of protectionist bungs such as higher tariffs and “production-linked incentives” (PLIs) to promote manufacturing, on which the state is spending $26bn over five years—but businesses love them. Christopher Wood of Jefferies, an investment bank, forecasts that if the BJP lost the election, the stockmarket would drop by 30%.
Industrialists are not shy about expressing their adulation. Two weeks before making the pilgrimage to Ayodhya, the heads of India’s three biggest conglomerates fawned on 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 India’s history”. Natarajan Chandrasekaran of Tata Sons spoke of Mr Modi’s “visionary leadership”. Gautam Adani of the Adani Group lauded him for setting “a benchmark for a more inclusive world order”. Lesser business figures zealously echo such sentiments, ideally within earshot of government officials.
In private, the praise is more guarded. Corporate leaders value Mr Modi’s willingness to hear them out. He often turns up in person at business shindigs, which have mushroomed on his watch. Behind closed doors he meets not just big bosses but also lowlier executives. Regional and Indian heads of multinationals report that during such audiences he listens to them intently, asks clever questions and never comes across as distracted or bored. They feel free to give him their unadulterated opinions about policy, which he takes in even if he then feels free not to act on them.
He is also perceived as personally incorruptible—a welcome exception to India’s venal politics. Some businesspeople grumble that the government makes life easier for national champions, such as Reliance and Adani Group. But they concede that these groups are putting money into areas such as telecoms, energy and infrastructure, all of which India needs, and that their relatively meagre financial returns do not scream cronyism. When prominent companies stumble because of mismanagement, Mr Modi does not intervene to save them from insolvency. That includes firms run by people seen to be close to him, such as Mr Ambani’s brother, Anil, who headed a rival conglomerate, and the Ruia family, owners of Essar Steel.
Mr Modi has also, bosses acknowledge, opened doors for them abroad. He used his recent stint chairing the G20 club of big economies to promote himself—but also to promote his country. He has established stronger ties with America, Israel, Saudi Arabia and the United Arab Emirates. Indian financiers and executives say they can now get meetings with American, Arab and European bankers who a decade ago would have ignored their calls.
Criticisms come in more hushed tones. India’s GDP per person grew briskly under Mr Modi by emerging-world standards but had risen half as fast again under his predecessor, Manmohan Singh of the Congress party, who also ruled for ten years. Stockmarket returns, too, have been lower in the past decade than in the one before (see chart 2). India may be resurgent, but the official measure of business investment as share of GDP is not (see chart 3).
Many of Mr Modi’s most successful policies, such as the digital ID and the GST, were first put forward by Mr Singh’s government. Some taxes are lower but, with the exception of the GST, no less Byzantine. The 73-year-old prime minister has no obvious successor. Although he remains sprightly, his eventual departure could therefore lead to political instability of the sort that businesses prefer to avoid.
Such concerns come up again and again in conversations with prominent business figures. None wants to be quoted. One reason for the public silence is as old as the Indian state: a rapport with the government can help businesses cut through impenetrable red tape; a lack of one can leave them at the mercy of bureaucrats. Another reason is new, specific to Mr Modi’s BJP, and uttered underbreath. Criticism, businesspeople whisper, can invite retribution. This may come in the form of a probe by the Department of Revenue, the Serious Fraud Investigation Office or the Central Bureau of Investigation. It may concern matters dating back years, which makes defending yourself harder and costlier. To many luminaries of India Inc, staying in the government’s good graces has gone from advisable to existential.
Fear of no favour
A tycoon last aired such concerns openly four years ago. Rahul Bajaj of the Bajaj Group, another conglomerate, told Amit Shah, Mr Modi’s home-affairs minister, “You are doing good work, but despite that we don’t have the confidence that you will appreciate it when we criticise you openly. Intolerance is in the air.” Under Mr Singh, by contrast, the government was fair game. Mr Shah responded that “there is no need for anybody to fear…we have done nothing to be concerned about [with respect to] any criticism”. “If anyone does criticise,” he added, “we will look at the merit…and make efforts to improve ourselves.”
Bajaj died in 2022, aged 83. No other corporate grandee has publicly echoed him since. In the eyes of his fellow industrialists, Mr Modi and his government are still doing good work. But intolerance is still in the air, too. ■
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