The democratic image and soft power of India is losing force. National and international criticism of Indian leader Narendra Modi is growing. For the prime minister of a fast-growing and the world’s fifth-largest economy, a slowdown of the economy does not bode well and will likely fuel wider criticism of his leadership style. The Modi government’s leverage hinges strongly on being one of the fastest-growing economies in the world. Growth fell from 8% in the middle of last year to 5% year-on-year in the most recent quarter. Although Modi is seen as a leader who is good for business and the economy, there are worries that the economic troubles might be more than cyclical. Moreover, unemployment is on the rise, posing a challenge. The risk is that Modi will not push for the necessary economic reforms (labor, tax and financial sector reforms) and focus more on projecting his power through nationalist politics instead.

As a rising superpower and the world’s largest democracy, India, unlike China, for example, is more susceptible to accusations of infringing on the freedom of its citizens.

The ongoing proxy war with Pakistan in Kashmir and the encroachment on civil freedom in the latter region are among the main points of internal and external contention. In August, the Indian government revoked Article 370 of India’s constitution, which guaranteed special rights to the Muslim-majority state, the most far-reaching political move regarding the disputed region in nearly 70 years. Currently, eight million Kashmiri Muslims are living under security lockdown, have no internet connection and are restricted in the transport of people and goods. A record of 3000 people are jailed. This crackdown on Kashmiri Muslims is called a move of punitive populism, a political strategy that refers to leaders’ use of tough-on-crime rhetoric and policies to gain popular support. As the economy weakens, Modi’s attention seems to be focused on strengthening his mandate by protecting the nation from an “enemy” in the form of the Muslim minority in the Jammu and Kashmir region.

Another threat to India’s democratic functioning is the fact that freedom of speech is compromised. Indian news media did not seem to express any criticism of the government’s decision to revoke Article 370. Meanwhile, India is under fire for leading internationally in temporary internet shutdowns. And finally, the country is considering censoring streaming platforms like Netflix and Amazon Prime Video. These are all stains on the democratic soft power image of India.

Modi’s actions in Kashmir do not only reflect a crackdown on democratic values, but also point to a centralization of power in a country that has heretofore been governed in a decentralized way. Seeing this increasing centralization of government power, critics have expressed worries that India cannot work from the center. India was among the first countries to constitute a federally governed multicultural democracy. But Modi revoking the special rights of Kashmir has nullified this, showing that the government is pursuing a Hindu nationalist agenda.

Implications:

  • Although Modi was convincingly reelected, as economic performance declines further, support for Modi and his party BJP will dwindle. In the state Haryana, the highest rate of unemployment can be linked to a fierce drop in support for the BJP. The question remains how long Modi’s Hindu nationalist, punitive populist agenda can serve as a narrative to support his leadership.
  • A slowdown of the Indian economy is a real risk considering the fact that new economic reforms are highly needed while Modi does not seem willing to act.
  • There is no reason to assume the Kashmir conflict will end anytime soon, leading to more international disapproval and heightened tensions and trade restrictions between India and neighboring countries.

RISKS MARKED ON THE RISK RADAR AS NUMBER 1

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