The New York-based global investor and author Ruchir Sharma in his book, Democracy on the road, offers an unrivalled portrait of how India and its political system works, drawn from his two decades on the road covering election campaigns, travelling the equivalent of a lap around the earth! In an interaction with Outlook Business, Sharma shares his insights and why he believes India’s reforms will continue unabated.
How has India changed from the 1970s, when you were growing up, to what it is today, given that you have described the country as "disorganised, chaotic, constantly on the brink and yet, miraculously it functions”?
My favourite line in the book is: “Changes upon changes, yet India remains the same”. This was on my return trip to Bijnor, UP late last year to write the closing chapter. I say that, because it would take me four hours to travel 160 km distance from Delhi to Bijnor when I was a child in the ’70s; and it still takes four hours. It is significant that you have six-lane highways, major industrial towns, and heavy traffic, but that’s what also slows you down. In the olden days, there would be just one pontoon bridge and a road. That was the problem then. Today, we have a different one. Hence, changes upon changes, yet things remain the same in India.
Both the 2014 and 2019 elections have seen the issue of dynasty in politics being kept alive by the BJP against the Congress. What’s your own observation of the Grand Old Party being spoken about as a family enterprise?
I don’t think dynasty per se is a Congress domain but runs through the Indian system. Dynasty is deeply rooted in Indian culture, and statistics indicate that two-thirds of Indian companies are hereditary in nature in terms of ownership. It’s true of Bollywood, corporates, enterprises and politics.
Interestingly, in the ’80s almost all the chief ministers would be married. Last year, one-third of all the chief ministers were single. That is the transition that is taking place. The leader can claim to be less corrupt because he doesn’t have any one to share his wealth with. It shows a greater level of commitment. Being single is more of a USP, but dynasty is a fact of life in India.
Does “being single” give Modi an edge over others, not to mention Vajpayee, who was also single in a sense but had an extended family?
Indian election is a very complex exercise. So, it is very difficult to base it on one factor. Though at a personal level, [being single] makes corruption hard to stick. In 2016, when Mamata Banerjee was facing allegations of being involved in the chit fund scam, she would stand up on stage and say that she is a ‘simple woman and has nobody to share her wealth with’. So, I think that resonated well with the public. If you happen to be single, leaders can market it as a sign of greater commitment.
You hold the late Vajpayee in high esteem and believe he was a true statesman. Where does Modi stand with his good oratory and the ability to connect with masses across the country?
I think they are very different personalities. In fact, the popularity gap between Vajpayee and Sonia Gandhi (in 2003-2004) was larger than what it is between Modi and Rahul Gandhi. Vajpayee was popular, but he was a very different leader. He came across as someone much more willing to take people along. As far as Modi is concerned, he comes across as someone strong but polarising. I would caution against the view that he will be able to extend his charisma across the country. We have been to the south of India, where there is much resentment towards the north.
You have spoken of powerful leaders across the globe who could implement radical reforms on account of their personal charisma. Would you say the same of Modi for implementing demonetisation?
I don’t consider demonetisation as an economic move. It had serious economic implications, but it was a political move. In fact, I went on record immediately after the note ban to argue against it. This is not the kind of reform one believes in. We believe in reforms that give people more economic freedom. Demonetisation was more about state control.
You have mentioned in the book that even in the 1980-90s there was this resentment towards appeasement of Muslims. In that context despite the slogan ‘sabka saath sabka vikas’, why is Modi still seen as a polarising figure?
People read into actions like BJP not nominating a single Muslim candidate in UP or just one in Rajasthan in the recent assembly elections. Also, playing up ‘Love Jihad’, but no ‘Vikas’. I don’t think you have to talk about it. It’s about what the actions are and that’s how it is perceived.
Not putting up a Muslim candidate could also be calculation of nominating a candidate who can deliver the numbers? A Muslim candidate may not serve the larger purpose of getting votes?
That’s entirely possible. Every political party makes that calculation. For me, one of the greatest politician or leader of our generation is possibly Ronald Reagan. He was a great reformer and visionary who achieved a lot. He also managed to expand his base. When Reagan first got elected in 1980, he was seen as a divisive figure — Republican, conservative and pro-white. But, by 1984, during his re-election, nearly 30% of the black community was willing to vote for Reagan. The change that took place between 1980 and 1984 was quite significant. That’s what a true leader is all about. That, according to me, is a better model than giving up on one very large segment.
How are you viewing the rise of a new crop of Dalit leaders emerging, especially in the UP?
Cultural norms have changed over the past 30 years; raw discrimination has eased. But the caste lines are as strong as ever in terms of how people think about voting. What I find fascinating about India is the rise of Dalit leaders. Bihar is another empowered case where upliftment of the backward caste was quite significant. My observation is that leaders can rise in their own pocket boroughs, but they have zero appeal outside their own states. Ram Vilas Paswan can’t have any traction in UP because his Dalit base is very different from Mayawati’s Dalit base. In fact, their Dalit bases don’t quite get along. You can’t get any national leaders on the basis of regional presence.
Does the three-way fight in UP work in favour of the BJP?
I don’t think it works in favour of or against a party. Congress’ entire vote bank in UP is based on individual candidates. There is no pan-state vote base. It’s not as if the brahmins or some other constituency votes for them. It’s a legacy vote at best. If you get strong candidates in Raipur, Amethi, it lifts the entire vote base. Hence, I don’t see Congress cutting into anyone’s votes. It depends on which candidate stands in which constituency. There is another argument that, if any, the upper caste votes would get divided as they have been disaffected by the fact that enough has not been done. I don’t think Congress is going to make a difference; it might, at best, split the votes equally. UP is very much BJP vs the SP-BSP alliance.
Can BSP-SP thwart BJP’s chances?
Clearly, they have the edge and that’s how Indian political arithmetic works. Eight out of 10 times, coalitions tend to work out.But I don’t know what their numbers will be. But for me the alliance coming together is the story of election 2019. It’s all going to be about how many alliances come together in which state and that will determine the election.
What is your view of the Mahagathbandhan being dubbed as a ‘club of opportunists without any manifesto’ and that the fact it’s all about Modi vs Who?
Parliamentary elections don’t work that way. The Modi vs Who narrative is only prevalent in cosmopolitan urban centres. I don’t think people think that way at the ground level, and vote on the basis of who will be the PM. If you look at the history of Indian elections, they vote for whomever they want at the local or state level. The PM is often a surprise.
But Modi has managed to campaign in a presidential style?
It’s not true. I end the book on a note that there is a major role reversal today. In the 1970s and 1980s, Congress would have a very similar campaign — who after Indira Gandhi or Rajiv Gandhi. If the opposition won, you would end up with squabbling leaders. If you go back and look at the '89 campaign, I remember the campaign was very negative towards the opposition. Newspaper headlines cautioned against them. It didn’t turn out that way. Similarly, in 2004, Vajpayee’s popularity was incredible and that was the biggest surprise election in India’s history, and that’s really how India votes. In 1984, at the height of the Indira-Rajiv Gandhi wave, Congress’ vote share had not crossed 50%, which was hard to fathom.
In 2014, the youth had turned out in high numbers, do you see a repeat?
One of the surprising observations I made during my travels to Bijnor is that there is no real evidence of the youth voting very differently. In many places, they are still voting on caste lines, the way their forefathers did. I don’t buy the theory that the youth are voting very differently and that’s going to make a big difference.
There is a line in the book that says, “Congress doesn’t know how to sit in the opposition and BJP doesn’t know how to run a government”. Does that still hold true?
That was a comment made by a candidate in Tonkin, Rajasthan in 1998. I think Congress has been humbled severely. The comment was made in 1998 when BJP hardly spent any time in power. Since then, Congress has spent as much time out of power as it has in power. But what’s true is that the environment is polarised no matter who is in the opposition or who is the ruling party. The discourse is very polarising.
In the book you have mentioned of leaders losing power over inflation and corruption. But today, low inflation doesn’t necessarily mean you will stay in power. Also, low food inflation means more stress in the farm lands?
That’s true and that’s what makes the complexity of winning the Indian election. High inflation is clearly bad. The number of governments who have lost because of rise in prices is quite incredible, starting with PV Narasimha Rao and Rajiv Gandhi in 1989. My travels in MP and Rajasthan reveal, this [farmer distress] is as much a problem of government’s inability to deliver. Farmers in MP told us the government sets an MSP, but nobody clears their money. They are forced to sell in the open market and that depresses the prices. It’s as much as a symbol of the broken Indian state than about the fact that inflation is too low.
The government has tried to address that…
One of the big lessons I have learnt is that, whenever governments announce measures closer to the polls, voters tend to be much more cynical. I can’t remember a single election where some last minute big programme was announced and the incumbent government was able to win based on that. We saw that in Karnataka when Congress indulged in the Lingayat card; it had no effect in moving the base away from the BJP.
Don’t you think doubling the IT slab to appease the middle-class voter and pension for workers will move the needle?
Voters are cynical about anything undertaken now. So, I am not sure anything done now will have a big effect.
In the event of NDA managing a coalition, will we see a different kind of Modi, not authoritarian but Modi 2.0, who is more amenable to his coalition partners?
I have no way of speculating that. The only observation is that during elections, politicians tend to be much more accessible. Hopefully, we will see that change with everybody. Once they are in power, you hardly see them and are surrounded by a bunch of sycophants.
Will the election outcome have an impact on the reform process?
No matter who comes to power, the pace of reforms in the country has been incremental in nature. I don’t believe that governments have a huge impact on reforms as far as the economy is concerned. In fact, the longer a government stays in power, lesser is the reform momentum. No government carries out big breakthrough reforms in this country, unless there is a crisis.
In fact, people are very scared of coalition governments in the country. But if you look at India, the best development model is when the state CMs deliver. This is a country of 29 sub-nations, so best reforms are carried out at the state level. At the national level, it is very difficult to do anything dramatic.
What are your best and worst case scenarios?
At this stage, it is a very competitive election. A year ago, everyone thought it was certain that Modi would get a second term. Today, it’s conventional wisdom that Modi has a chance, but it may be 50-50.
But what happens in the election will not have a bearing on the economy or markets. Those are driven much more by various international factors and the health of the private sector. As an Indian what I feel most optimistic about is that at a time when people are talking of how democracy in many parts of the world is on the retreat, it is thriving in India.