Two years after Narendra Modi swept to power in a landslide election, confidence is waning in India’s prime minister. Business executives in New Delhi and Mumbai grumble about the lack of big reforms and even wonder aloud whether Modi will win a second term. That might be premature given the next national election is in 2019, but the shift in tone is striking.
The prime minister has had a decent run so far. Under his watch, the government has re-committed to keep the fiscal deficit under control and India has become something of a bright spot for global investors. The country was the largest recipient of foreign direct investment in the developing world last year attracting $63 billion compared to $57 billion for China, according to fDi Intelligence.
Modi’s other notable achievements include accelerating the rollout of infrastructure and a reform of the country’s leaky subsidy regime. There has also been a clear reduction of crony capitalism. Passing a bankruptcy code last week was a major achievement, but one helped by the public mood swinging in favor of harsh action against tycoons like Vijay Mallya. The beer baron fled the country earlier this year amid a fight with lenders, leaving taxpayers to pick up the tab.
It is unclear if Modi can push through other landmark reforms, however. A goods and services tax and a land acquisition bill are stuck. What’s more, New Delhi has ducked responsibility for overhauling the country’s cumbersome labour laws, leaving them to states to tackle.
One reason for a stalemate is that Modi’s ruling Bharatiya Janata Party has waged a petty war with the main opposition Congress party which ruled India for decades. The prime minister has failed to build the consensus needed to pass things through the upper house of parliament where his party does not have a majority.
Modi’s party appears obsessed with things like defining what is “anti-national”. The prime minister’s own long silences on divisive issues, such as the lynching of a Muslim suspected of eating beef, have alarmed liberals. To regain his momentum, Modi needs to become a more inclusive, consensual leader.