Indian Prime Minister Narendra Modi is GRI’s 2014 Person of the Year in political risk. Much like Mexico’s President Enrique Pena Nieto last year, Indian Prime Minister Narendra Modi has become noteworthy both domestically and internationally for defying political and economic tradition.
Under Prime Minister Modi’s stewardship, the National Democratic Alliance (of which his Bharatiya Janata Party (BJP) is by far the largest party) rose to achieve majority status in the Lok Sabha in May this year, a feat unprecedented for the BJP in India’s democratic history.
The shift has presaged a significant shake-up of the Indian political realm, and Modi has since tried to harness this energy to lead to significant economic reform.
Both his temperament and economic moves have been endlessly dissected by the Indian and international press, and three key points stand out from these assessments:
1. Modi’s persona is winning friends and influencing people in India and abroad. In public appearances abroad, Modi introduced himself as a humble advocate for India’s interests; he has also used several international trips to burnish his credentials as a game-changing Indian premier. On a trip to the United States in September (and following years of criticism from the U.S. of his leadership of the state of Gujarat during the 2002 anti-Muslim riots), Modi addressed a crowd gathered in New York that those who criticize his lack of big plans upon his accession to office as PM that he merely came in “as a man selling tea.”.
While working to improve strained Australia-India relations, Modi also played a more relaxed role in Australia, enjoying an Aboriginal performance in Brisbane and several light-hearted moments with Australian Premier Tony Abbott. This folksy approach has extended into domestic politics, particularly his August Red Fort speech, in which he insisted that he was speaking not as the Prime Minister but as the “prime servant.”
Modi has also used social media extensively to appeal to the young Indian electorate, as well as increase the transparency of the daily affairs of the office of the Prime Minister. This fostered a humble and more modern approach to governing and public diplomacy.
2. Modi wants to make India business-friendly. Prime Minister Modi ran his 2014 campaign promising significant economic reforms, should he and the BJP achieve higher office. But his somewhat tepid pace and institutional roadblocks has disappointed some.
Since becoming Prime Minister, Modi and the Lok have engaged in limited administrative and procedural reforms, as well as an October reform to reduce diesel subsidies and increase natural gas tariffs. The acceleration of international licensing agreements has been hailed by outside investors, as well as increasing the limit of foreign direct investment in vital industries like infrastructure. and the heavily bureaucratic Indian economy is slowly picking up.
But several major reforms in taxation (particularly the goods and services tax) and subsidies will require the support of India’s states (the breakdown of power from the national to local level, with significant influence locally, has created its own economic challenges), tying Modi and the Lok’s hands in initiating major change.
3. Modi has pursued India’s interests in the international arena, even if it creates friction with allies. Modi’s efforts to mend bridges in bilateral relations with other countries and to “open new chapters” in India’s international relations should not be confused with a timidity to assert India’s national interests on the world stage. In December 2013, Modi blocked the Bali Ministerial Agreement of the WTO Doha Round until the US and EU agreed not to use the WTO to litigate against India’s agricultural subsidy policies.
Despite pressure from the US and EU to remove his opposition to implementing the estimated $1 trillion trade-enhancing deal, Modi successfully withstood both domestic and international condemnation.
The Prime Minister has also sought to increase India’s international presence with collaboration on issues like the BRICS’ newly launched New Development Bank, as well as establishing bilateral relations with various countries.
