Modi Shouldn't Fall Into The Indira Gandhi Trap

Published: November 24, 2017 11:36 IST
The birth centenary of former Indian Prime Minister Indira Gandhi last week was not marked by any particularly impressive celebrations. Perhaps the moment didn't require commemoration; today's India is still very much the country she shaped, although the party controlled by her family, the Congress, is no longer in power. And India's inability to move beyond Indira is not at all a good thing.

Gandhi was installed as prime minister in 1967 by a group of Congress insiders -- called, menacingly, the "Syndicate" -- who thought she would be a compliant figurehead. Within a few years she had outmaneuvered them, split the party and routed their faction in a general election. This wasn't the first time that a group of men had underestimated her and it wouldn't be the last.

In terms of pure political charisma, few politicians in the world's largest democracy have ever matched her; perhaps only Narendra Modi, India's current prime minister, comes close. It is instructive, however, that she rarely used her enormous political popularity to push India forward or to make ordinary Indians' lives better.

Instead, India is yet to recover from her leap toward state control of the economy. Unlike her father, India's first Prime Minister Jawaharlal Nehru, Indira Gandhi had no great ideological commitment to socialism. She merely saw statism as politically useful. It helped her declare that she, unlike everyone else in politics, prioritized the interests of India's poor. She could use it to isolate her more moderate rivals in the Congress party and their backers in business.

In 1969, she suddenly nationalized all of India's banks -- an act not born out of careful strategizing about how to expand credit to the poor but, essentially, as a way of humiliating and forcing the resignation of her finance minister, Morarji Desai. While Desai went on to be prime minister 10 years later, Indira's policies were so entrenched that he couldn't reverse the nationalization. No Indian leader has been able to privatize state-run banks, in spite of the fact that they've had a chronic bad debt problem and continually have to be bailed out using taxpayer money.

Indeed, ever since Indira won that rhetorical battle against the Syndicate, no Indian politician has been able to break the connection between economic populism and political power. When the Congress party liberalized India's economy in 1991, ending industrial licensing and opening up trade, Prime Minister P. V. Narasimha Rao was too timid and too much in debt to Indira Gandhi's statist thinking to back his finance minister, Manmohan Singh, fully. Rao forced Singh to reverse some market-friendly reforms and constantly insisted that his government's policies were quite in line with what Indira or her son Rajiv Gandhi had done -- a blatant falsehood but one that showed how the Congress, at least, would fail to grow out of Indira's shadow.

Sadly, things aren't much better on the opposite side of the aisle. When Narendra Modi swept to power in 2014, many hoped that he would use his phenomenal political presence to break with Indira's rhetoric of "pro-poor" statism. Yet early on in his premiership, stung by an accusation from the Congress that he was running a government for the rich -- the suited and booted, according to Congress scion Rahul Gandhi -- Modi pivoted left.

Last year's disastrous demonetization bore some similarities to the 1969 bank nationalization: It was decided with little preparation, purely for political reasons, and was sold as a gesture of solidarity with India's poor. Now, his government's focus is on populist anti-corruption campaigns -- in a manner very reminiscent of Indira Gandhi, who never saw class resentment without wondering how to win an election off it.

There is much else about Indira's legacy that should worry Indians. She was responsible for our only break with democracy, when -- supposedly in order to increase government efficiency -- she imprisoned the political opposition, suspended basic rights and ruled by decree between 1975 and 1977. She legitimized the use of religion in politics and supported several different religious extremist factions in order to achieve various short-term political ends. Her commitment to the institutions of liberal democracy was minimal. Her long reign hollowed them out so much that few of them are able to stand up to a powerful executive today.

Worst of all, she remained and remains one of India's most popular prime ministers in public memory. We expect our leaders to be formed in her image: powerful, dismissive of democratic limits and of consensus, deliverers of tub-thumping populist speeches. Those who break from that archetype, like Modi's predecessor Manmohan Singh, are punished politically. Those who would emulate it should remember that Indira's reign saw India's economy stagnate and its institutions go backward. That's not the kind of leadership a 21st century India needs.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

(Mihir Sharma is a Bloomberg View columnist. He was a columnist for the Indian Express and the Business Standard, and he is the author of "Restart: The Last Chance for the Indian Economy.")

To contact the author of this story: Mihir Sharma at m.s.sharma@gmail.comTo contact the editor responsible for this story: Nisid Hajari at

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