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How Modi's schemes were shaped by examples from East Asia

Modi’s governance ideas are deeply influenced by East Asian welfare-growth model and social ethos.

, ET Bureau|
Updated: May 26, 2019, 11.29 AM IST
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Narendra Modi
PM Narendra Modi with South Korean President Moon Jae-in in February
The impression is that Narendra Modi was a right-wing Prime Minister, who turned left to win the 2019 elections. But is that so? If anything, the stupendous victory on Thursday is the biggest rebuttal to the notion that it’s only Congress’s left-of-centre liberal socialism which has answers to a multitude of problems of India’s poor.

“The Left kept telling us about social problems… they kept talking but did nothing. We are the ones who have delivered,” thundered Modi at his victory speech at the BJP headquarters in Delhi as he claimed this new political space, which until now belonged largely to the Congress. But how? On the surface, as has been written about, it was the successful implementation of a range of schemes – Swachh Bharat, Ujjwala, Saubhagya, a recast MGNREGA, Ayushman Bharat, PM-KISAN, among others.

Yet, are these any different from the bouquet of schemes one got from the Congress? After all, many of the big ideas like Aadhaar and direct benefit transfers were started by the Manmohan Singh government, embraced and taken forward by Modi Sarkar.

East Asian Model
The difference is in the approach. What Congress brought to bear was a European socialist welfare model, one which assumes that the State is rich and what is required is a judicious redistribution of this wealth. The central idea here is to uphold each individual’s right to access state resources for a better life. Universal basic income, translated into NYAY by the Congress, is also a product of the same logic.

Modi, it appears, has a fundamental disagreement with this approach. His welfare economic model is more East Asian than European. South Korea, Singapore and, prior to that, Japan were countries that achieved social transformation in a shorter time span. In fact, the underlying characteristic of these East Asian economic miracles was that each of these countries competed with each other to compress the time frame for transformation.

Historically, European socialism followed industrialisation and modernisation. Large, skilled working classes had emerged in urban centres, but they lived in dire conditions without equal rights, opportunity and access to the enormous wealth Europe’s colonial powers had amassed.

So, redistribution of political power and wealth was key to the continent’s social transformation. In East Asia, however, social welfare was seen as a necessary first step towards achieving higher economic growth. These were not rich states like Europe, but they rationalised that without raising social standards they will not be able to create the aspirational conditions necessary to develop a skilled workforce for industrial manufacturing, thus modernisation.

Lee Kuan Yew’s People’s Action Party is a good example of this approach. The epochal 1959 election, which brought Lee to power, was fought on a manifesto that formed the basis of an aspiration to move Singapore from a Third World country to a First World nation.

The two big ideas that Lee put on the table was Clean Singapore and subsidised housing in which 26,000 flats were built with the objective of removing Third World squalor in slums and hutments. People moved to flats with toilets and then never wanted to go back to that squalor again. They worked to keep those standards and improve on them.

Modi’s Swachh Bharat was a similar move and so are programmes such as PM Awas Yojana and Smart Cities Mission. What countries like Singapore did was create physical, social and skilled infrastructure to make it attractive for foreign capital to invest there. In this model, not only was the State central to societal transformation but was the key catalyst for change. Interestingly, it was both paternal and intrusive, quite in sync with Asian paternalistic culture.

Social Discipline
The idea of discipline lay at the heart of the East Asian approach. The rationale was that public spend on welfare must translate into higher economic growth, not incentivise status quo.

Modi was faced with a similar question on the issue of farm distress after the BJP lost the state elections in Madhya Pradesh, Rajasthan and Chhattisgarh just months before the 2019 general elections.

The government knew something had to be done. The immediate political response would have been to curate a loan waiver scheme. The Congress had also come out with a dole-out scheme ahead of the 2009 Lok Sabha elections and reaped benefit as it returned to power with a bigger seat count.

At the same time, a measure like this would have been at odds with the Modi government’s professed commitment to fiscal prudence and discipline. Eventually, the matter reached the PM’s desk. He decided against a roughly Rs 1,50,000 crore loan waiver scheme and, instead, opted for an income-support programme. This took the shape of the Rs 75,000 crore PM-KISAN scheme under which a farmer would get Rs 6,000 in his bank account in three tranches.

Clearly, the PM chose a financially more prudent scheme rather than completely unsettle the fiscal deficit margins. Yet, it’s hard to believe why a politically sharp mind like Modi would not bite the bait if, at that point, this was the one thing which stood between him and victory in the Lok Sabha elections. He could very well have dealt with the consequences later.

Singapore
The two ideas that Lee put on the table was Clean Singapore and subsidised housing in which 26,000 flats were built with the objective of removing Third World squalor.

The truth, perhaps, is that he was never convinced of the political rationale of it as well. The idea of deploying resources that would condone, if not incentivise, bad financial practices did not augur well with Modi’s welfare approach. Yes, farmer distress was genuine. So, in his book it made sense to provide support to tide over a crisis, not a dole to forget debt.

Aspiration and social discipline go hand in hand in the East Asian model. China, one must not forget, also learnt from Singapore.

South Korea
Reminiscing about his days as Gujarat CM last October, Modi said he wanted to make the state a South Korea

As a well-documented story goes, former Chinese president Deng Xiaoping had the habit of spitting, maybe due to his regular use of tobacco and smoking. When he visited Singapore in 1978 in the middle of a cleanliness drive in the island, Lee Kuan Yew had placed a specially designed spittoon for him. It’s said that Deng got the message and did not spit in public throughout his visit, nor did he use the spittoon.

Soon after that visit, Deng recast China’s relationship with Southeast Asia and entered into a special partnership with Singapore. In the mid-1980s, he sought the services of former Singapore deputy PM Goh Keng Swee, the man who came up with the idea of the Singapore government setting up a sovereign wealth fund. He was made economic advisor to China to help set up its Special Economic Zones. Incidentally, today spittoons are frowned upon as unhygienic objects even in China.

The Call of the East
The impact of East Asia on Modi is profound. Between 2002 and 2014, as the US and Europe shut their doors on the Gujarat chief minister for political reasons, he ended up travelling a lot to the East — Japan, Singapore, South Korea and China were some of his frequent destinations.

The Shinkansen bullet train, for instance, made a lasting impression on him during his visit to Japan and, as PM, he worked out a deal to have one ply between Mumbai and Ahmedabad.

The East Asia imprint is also visible on the Modi government’s flagship health insurance scheme Ayushman Bharat. Indu Bhushan, who is the CEO of the scheme, headed the East Asia department in the Asian Development Bank where he interacted closely with health insurance programmes of South Korea, China and Thailand. In fact, Korea arguably runs the world’s best health insurance programme, another East Asian country which has had a deep impact on Modi.

Reminiscing about his days as Gujarat CM at the Uttarakhand Investors Summit last October, Modi said he wanted to make Gujarat a Korea. “I was (once) asked what I would consider an ideal model for Gujarat. Generally, one would expect a reply such as America or England, but I said I wanted to make Gujarat like South Korea.” When Lee Kuan Yew passed away in 2015, Modi went out of his way to make it to his funeral. As part of routine protocol, it was first decided that the then vice-president Hamid Ansari would travel to Singapore but Modi rejigged his schedule to be there personally.

Lee Kuan Yew
When Lee Kuan Yew passed away in 2015, Modi went out of his way to make it to his funeral

Modi is not the first Indian PM to be influenced by East Asia. When India liberalised in the 1990s, prime minister Narasimha Rao and his finance minister Manmohan Singh crafted their economic turnaround based a lot on the East Asian experience. This later formed the cornerstone of the Rao government’s Look East policy.

If Singh, who later became PM, relied on East Asian success stories to reorient the Congress’s economic outlook in the post-Cold War era, Modi seems to have borrowed from the East Asian social welfare model to craft the BJP’s first credible approach for India’s poor. And, going by Thursday’s results, it has worked a political miracle for the party.

Quality of Life
Affordable healthcare, housing, clean surroundings, cooking gas, assured electricity are together a package aimed at lifting the quality of life, which the PM calls Ease of Living.

Affordable healthcare, affordable housing, clean surroundings, toilets, cooking gas, assured electricity, enabling an environment for women to join the workforce in large numbers are together a package aimed at lifting the quality of life, which the Prime Minister calls Ease of Living. In the East Asian frame, this raises the floor of expectations. The idea is people will skill themselves to maintain this standard of living. That’s how a new workforce was created, which gradually caused the manufacturing epicentre to shift eastwards.

Shinkansen
The Shinkansen made a lasting impression on Modi during his Japan visit

The challenge for Modi is that India has all but missed the bus as far as manufacturing is concerned. So, what’s the future for this new aspirational class? That eventually takes us back to the employment debate as people look for work commensurate to their way of life.

In other words, Modi, in his second innings as Prime Minister, will have to find a governance model that will integrate his welfare model with high economic growth model. East Asia found its answer in manufacturing; where will India head?

The answer to that question is not clear. But whatever it is and howsoever complex it may be, just like his ambitious schemes, he will just have to make sure they take off.
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Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service