Though PM Modi is seen courting global capital, he’s handicapped by the economic philosophy of the RSS, which wants government policies to be in sync with Indian culture. What is the way out of this tug of war?
By Sampad Patnaik
The Modi government is sending out contradictory signals with respect to globalization. The prime minister seems to be in perpetual courtship with global capital. His government is clear that global capital and industry have a role to play in creating the millions of jobs promised during the 2014 election campaign. Yet, Nirmala Sitharaman, commerce and industry minister, confirmed that the government’s opposition to foreign direct investment (FDI) in the branded retail sector has not wavered.
Jagdish Bhagwati, an eloquent exponent of the Modi government, has said he expects the government to reverse its opposition to FDI in branded retail. Bhagwati has said the government will change track as soon as it consolidates adequate outside support to overlook the concerns of the petty bourgeoisie, a loyal constituency of the BJP, which is opposed to FDI in retail.
FDI IN RETAIL
However, the issue may be more complicated than a problem of trading one support group for another. The case of FDI in retail is one example of a larger trend. The Hindu nationalism movement’s economic philosophy sometimes clashes with the economic policies of the ruling BJP government.
Philosophy reflects the core thoughts of an organization, while policy refers to day-to-day directives. Philosophy, like strategy, is more stable, while policies, like tactics, can vary as per the exigency of the moment. When in power, the BJP has had to make compromises with international capitalism. The party has allowed the entry of foreign consumer goods, which bring “foreign” values, like commodity fetishism. In doing so, the BJP has had to steer away from the economic philosophy of the Hindu nationalist movement, which seeks embedding economic practices in cultural habits, or what may be called “cultural capitalism”.
Cultural capitalism is marked by three principles. It supports indigenous industry, small-and-medium enterprises that produce handicrafts, native food and native textiles. Secondly, it prefers domestic savings to manage its investments, over global capital. Thirdly, while cultural capitalism advocates the pursuit of wealth, it also promotes moderation of consumption.
A household could save more if it consumed less, so families should spend on “necessities”, such as food, housing, clothing, education, and not on “luxuries” like cinemas, restaurants and brands. Whenever a BJP government at the center violates these principles, there are tensions between the government, the party and other affiliates of the Hindu nationalist movement.
STRONG NATION-STATE
The tensions began in the term of the first national BJP government, under PM Atal Bihari Vajpayee, which sometimes acted against the principles of cultural capitalism and embraced globalization for political reasons. As the BJP broadened its electoral base in the late nineties, it started strongly identifying a loyal voter in the middle class. Many of BJP’s new voters, while not identifying with all aspects of Hindutva, agreed with BJP’s vision of a strong nation-state. These voters expected that a strong state had to be a wealth-creating one, which built the infrastructure necessary for economic growth. The party realized the need to demonstrate support for globalization and global capital because domestic savings were inadequate for long-term investments.
The second factor that forced the BJP’s hand was the flight of its core upper-caste voters into the private sector from the public sector. The BJP realized that there was considerable upper-caste disenchantment, after job reservations for backward castes in the public sector were implemented by the VP Singh government. Many among these upper castes felt the private sector protected their “merit-based” performance. Promo-ting private industry could, therefore, pay high dividends among the party’s “natural” voters. But private industry demanded access to global capital and the BJP felt itself pushed towards globalization.
Thirdly, the upper-caste and middle-class migration to Western countries, especially the US, compelled BJP to accommodate globalization. These emigrants had not only achieved economic success, but developed greater affinity for their Indian roots in culturally-alien Western lands. The BJP realized that a rejection of foreign-based, multinational corporations (MNCs) in which these Indians work, would make it difficult to sustain the support of a wealthy and well-connected diaspora.
Finally, the BJP also realized that it could find much more acceptance within the international community, which saw it as partisan and divisive, if its government was not hostile to MNCs based in the West.
However, the BJP’s departure from the canons of cultural capitalism led to tensions with other Hindu nationalist affiliates. The RSS understood that any BJP government had to seem friendly to global businesses, in order to be accepted by foreign governments. It did not object to, say, large-scale arms acquisition to keep Western governments happy and “strengthen the motherland”. But the RSS is especially hostile to lifestyle businesses, food chains and clothing retailers, as it feels Western goods are likely to overwhelm Indian youth with Western culture. This is one reason why the BJP, while not averse to FDI, opposed it for the branded retail sector.
In the current political landscape, Modi has a majority in the Lok Sabha and a demoralized opposition. Nevertheless, he has to abide by the oversight mechanisms of his ideological brethren. A pro-growth and pro-jobs agenda implies greater dependence on international capitalism. It is not easy to court the US India Business Council while snubbing one of its most powerful members, Walmart.
The larger narrative in this paradox seems to be a philosophical tension, between ideology and realpolitik, which has placed “guardians” of Indian culture also in charge of Indian capitalism.
— The writer is an Oxford scholar