Amitabh Kant, the Indian Middle Class and their Dream of a Benevolent Autocrat

Dekh tere sansar ki halat kya ho gayi bhagwan,
Kitna badal gaya insaan, kitna badal gaya insaan.

— Kavi Pradeep, C Ramachandra, Kavi Pradeep and IS Johar, in Nastik (1954).

Sometime in late December last year I was part of a panel deliberating on where the Indian economy is headed, at a business school in Mumbai.

Towards the end of the discussion, a fund manager sitting towards my right, offered his final reason on why the so-called India growth story was faltering. He said, India has too much democracy.

The room was full of MBA students, just the kind of audience which laps up reasons like the one offered by the fund manager. As soon as he finished speaking, I explained to the audience why the fund manager was wrong, not just because India and the world need democracy, but also from the point of view of economic growth.

Of course, that wasn’t the first time I had heard the too much democracy argument being made in the context of it holding back India’s economic growth. Over the years, I have seen, friends, family members, random acquaintances and men and women I don’t know, make this argument with panache and great confidence.

It seemed, as if, in their minds, they had a picture of this great leader who would come on a white horse, brandishing his sword, and set everything right. They wanted India to be governed by a benevolent autocrat. 

Given this, it is hardly surprising that Amitabh Kant, the CEO of the NITI Aayog, and one of central government’s top bureaucrats, said yesterday (December 8, 2020): “Tough reforms are very difficult in the Indian context, we are too much of a democracy.”

The thinking here is that given that India is a democracy, decision making takes time and effort and you can’t just push through economic reforms which can lead to economic growth. Getting things done needs a collaborative effort and hence, is deemed to be difficult. Hence, it would be great to have less democracy, making it easier for a strong leader to push economic reforms through.

Of course, the mainstream media has largely ignored Kant’s comment. But this is an important issue and needs to be discussed.

The question is where does the thinking of too much democracy come from.

Some of it is remnant from the emergency era of 1975-1977, when trains used to apparently run on time. Trains not running on time was basically a manifestation of the general frustration of dealing with the so-called Indian system.

The logic being that, with the then prime minister Indira Gandhi keeping democracy on a backseat, it essentially ensured that the system (represented by trains) actually worked well (represented by trains running on time).

In the recent years, too much democracy hurting India’s future economic prospects comes from the economic success of China. China doesn’t have democracy. The Chinese Communist Party governs the country. In fact, there is no difference between the Party and the government.

This essentially has ensured they can push economic growth without any resistance from the opposition, different sections of the society or the citizens themselves for that matter.

China is not the only example of this phenomenon. Countries like South Korea under Park Chung-hee, Taiwan under Chiang Kai-shek and Singapore under Lee Kuan Yew, made rapid economic surges under leaders who can be categorised as benevolent autocrats.

As economist Vijay Joshi said at the 15th LK Jha memorial lecture at the Reserve Bank of India, Mumbai, in December 2017:

“ Fewer than half-a-dozen of the 200-odd countries in the world have achieved super-fast and inclusive growth for two or more decades on the run, and almost all of them were autocracies during their rapid sprints.”

So, history tells us that most super-fast growing countries at different points of time have been autocracies.

Beyond this, there is the so-called India growth story which also leads to the sort of thinking which concludes that too much democracy hurts economic growth. Ravinder Kaur makes this point beautifully in Brand New Nation—Capitalist Dreams and Nationalist Designs in Twenty-First-Century India.

As she writes:

“What is dubbed a growth story in policy-business circles is essentially an enchanting fairy-tale blueprint of economic reforms along with calls of a strong political leader to implement it… After all, capital has always rooted for strong, decisive leaders and centralized governance that can ensure its swift mobility and put the nation’s resources at the disposal of investors.”

A good part of India’s corporate and non-corporate middle class buys into this kind of thinking. They look at themselves as investor-citizens.

This leads to the firm belief that autocracies lead to faster economic growth. Hence, too much democracy is bad for economic growth. Only if India had a stronger leader. QED. Or so goes the thinking.

Dear Reader, this is nothing but very lazy thinking. While, most super-fast growing countries may have been autocracies with a benevolent autocrat at the top, the real question is, are all autocracies with a benevolent autocrat at the top, or at least most of them, super-fast growing countries.

Economist William Easterly makes this point in a research paper titled Benevolent Autocrats. As he writes: “The probability that you are an autocrat IF you are a growth success is 90 percent. This probability seems to influence the discussion in favour of autocrats.”

But that is the wrong question to ask. The question that needs to be asked should be exactly opposite—if a country is governed by an autocrat what are the chances that it will be a growth success? Or as Easterly puts it: “The relevant probability is whether you are a growth success IF you are an autocrat, which is only 10 percent.”

And this is where things get interesting, if we choose to look at data. Ruchir Sharma offers this data in his book The Ten Rules of Successful Nations. Let’s look at this pointwise.

1) In the last three decades, there were 124 cases of a country growing at faster than 5% for a period of ten years. Of these, 64 growth spells came under a democratic regime and 60 under an authoritarian one. Clearly, when it comes to countries growing at a reasonable rate of growth for a period of ten years, democracies do well as well as authoritarian regimes.

2) Let’s up the cut off to an economic growth of 7% or more for a period of ten years. How does the data look in this case? Sharma looked at data of 150 countries going back to 1950. He found 43 cases where a country’s economy grew at an average rate of 7% or more for a period of ten years. Interestingly, 35 of these cases came under authoritarian governments. As mentioned earlier, super-fast growth and autocrats go together. But this just shows one side of things.

3) So, what’s the other side? While super-fast growth in a bulk of cases has happened under authoritarian regimes, so have long economic slumps or economic slowdowns.

As Sharma writes:

“Long slumps are also much more common under authoritarian rule. Since 1950, there have been 138 cases in which, over the course of a full decade, a nation posted an average annual growth rate of less than 3 percent—which feels like a recession in emerging countries. And 100 of those cases unfolded under authoritarian regimes, ranging from Ghana in the 1950s and ’60s to Saudi Arabia and Romania in the 1980s, and Nigeria in the 1990s. The critical flaw of autocracies is this tendency toward extreme, volatile outcomes.”

Also, under authoritarian regimes, economic growth can see wild swings.

So, for every China there is a Zimbabwe as well, which people forget to talk or think about. For every Singapore, there are scores of African dictators who killed thousands of people during their rule and destroyed their respective economies. Hence, while autocracies may lead to super-fast growth, they can also lead to long-term economic stagnation and huge political turmoil.

Also, evidence is clear that steady growth happens best in democracies.

As Sharma writes:

“Together, Sweden, France, Belgium, and Norway have posted only one year of growth faster than 7 percent since 1950. But over that time, these four democracies have all seen their average incomes increase five- to sixfold, to a minimum of more than $30,000, in part because they rarely suffered full years of negative growth.”

Further, if you look at the list of countries with a per-capita income of more than $10,000, all of them are democracies. China, as and when it reaches there, will be the first autocracy, which will make it an exception. An exception, which proves the rule. That is, in the  medium to long-term, democracy and economic growth go hand in hand.

At least, that’s what history and data tell us. But don’t let that come in your way of believing the good story of authoritarian regimes run by benevolent autocrats leading to fast economic growth all the time.

It must be true if you believe in it. I mean, Mr Kant surely does. And so do a whole host of middle class Indian men and women.

Will Narendra Modi 2.0 please stand-up?

One of the strong points in favour of Prime Minister Narendra Modi in the run-up to the Lok Sabha elections last year was his tenure as the chief minister of Gujarat. He was seen and projected as a no-nonsense guy who got things done. Also, unlike the Gandhi family led Congress party, Modi did not come with any baggage.

In fact, Modi, as chief-minister, handled many important portfolios himself. After he was elected as chief minister of Gujarat again in December 2012, Modi kept important portfolios like home, industry, information, ports, general administration, science and technology, climate change, Narmada and all policies, with himself.

Given this long list of portfolios, power in Gujarat was very centralized around the chief minister’s office. Further, Modi chose to operate through trusted bureaucrats. This allowed him to cut through the red-tape that is a part of every government and ensured that things happened at a fast pace. This further helped project Modi’s image as a doer.

A paragraph from William Easterly’s book The Tyranny of Experts best explains the situation Modi was in: “The leader may have unconstrained power [i.e. Modi as chief minister in this case], but his intentions concerning what to do with that power are presumed to be good. He…just needs expert advice to accomplish good things.”

This was a model that worked for Modi in Gujarat and he brought it to Delhi as well. The prime minister’s office like the chief minister’s office in Gujarat is a very strong one. There is nothing wrong with this.

The only trouble is that in order to implement the economic reforms that he had promised during the course of the run up to the Lok Sabha elections, Modi needs much more than just a strong Prime Minster’s office. He needs votes in the Rajya Sabha that he does not have. These economic reforms are necessary in order to create jobs for nearly 13 million Indians that are entering the workforce every year.

One theory that has been projected by experts and analysts is that the Bhartiya Janata Party (BJP) led National Democratic Alliance will set their weakness in the Rajya Sabha right by 2017. The logic being that by then the BJP would have won a sufficient number of state assembly elections. And it is members of state assemblies who elect Rajya Sabha members. This also explains why Narendra Modi is campaigning so hard in Bihar.

The trouble is that unlike the Lok Sabha members, all Rajya Sabha members are not elected at the same time. The members have staggered six years terms. Further, one-third of the members retire every two years.

Given this, it is unlikely that even by 2019, the BJP led NDA will have a majority in the Rajya Sabha. As Pradeep Kaushal wrote in The Indian Express earlier this year: “Between now and 2019, when the Modi government’s term ends, the NDA will just about cross the  100-seat mark in the House — and that’s in the best-case scenario. That will leave it well short of the halfway point in the Rajya Sabha, which has an optimum strength of 250.” The current strength of Rajya Sabha is 244 members.

Kaushal further wrote: “Taking best-case scenarios of the BJP getting a simple majority in Bihar, and doing well in the West Bengal and Uttar Pradesh Assembly polls, the party can reach only around 70 by the end of its tenure.”

Given this, all important economic legislation will continue to remain stuck. This includes land acquisition reforms, which the government seems to have given up on and the goods and services tax, which remains stuck.

In this scenario, what Narendra Modi needs to understand is that his lone-wolf act who gets things done, is no longer working. He needs to reach out to parties outside the NDA, if any economic reform has to be pushed through.

What needs to be pointed out here is that the Congress party has around 68 members in the Rajya Sabha. Further, as members retire, this number is going to come down in the years to come given that the Congress no longer rules as many state assemblies as it used to in the past. And this is a factor that both Modi and the BJP need to exploit. They can seek inspiration from Atal Bihari Vajpayee who successfully ran a coalition of more than twenty political parties.

Also, the excuse that the Congress party is not letting it do things, doesn’t really hold. It is behaving exactly in the way that BJP did when it was in opposition. Every government has to face the opposition and work around and along with it.

Further, Modi needs to stop coming up with big hairy audacious goals. As analysts Saurabh Mukherjea and Sumit Shekhar of Ambit Capital wrote in a recent research report titled Civil servants burn the midnight oil in Delhi amidst growing policy drift:To be fair to the NDA, most of its problems are typical of any

Indian Government which juggles with paucity of funds and scarcity of talent. Where the NDA is different is in its desire to constantly announce Big Hairy Audacious Goals – policymakers repeatedly tell us that most of the targets that the ministers announce to the media have little or no feasibility analysis to support them. The more seasoned policymakers say that these targets can create issues for the NDA as it gets further into its tenure and is held accountable for its targets.”

Modi and NDA have set enough Big Hairy Audacious Goals for this particular term, be it general goals like Make in India or Digital India or Skill India or specific ones like increasing the share of manufacturing in the economy or rural electrification or increasing coal production. Over and above this they made many electoral promises as well in the run up to the Lok Sabha elections.

Easterly in his book The Tyranny of Experts quotes the Nobel Prize winning economist Gunnar Myrdal. As Easterly writes quoting Myrdal: “The political leaders of…countries have to arouse ambitions among the masses” because “this is their means of acquiring power.” The leaders know that “the aspirations which they know they can arouse successfully are the cravings for…economic development.””

This is what Modi and the BJP did in their quest to win the last Lok Sabha elections. And now it is time they started working towards achieving these goals and aspirations and delivering economic development, because if they don’t, all the promises that they made in the run up to the last Lok Sabha elections, might just turn out to be a marketing gimmick.

And marketing gimmicks don’t work twice.

The column appeared on The Daily Reckoning on Sep 2, 2015

Benevolent autocracy: India is drawing the wrong lesson from Lee Kuan Yew


One of the favourite arguments offered by middle class Indian men (especially when all other arguments fail) is that “India needs a benevolent autocrat,” if the economy has to grow at a fast pace. The word “autocrat” is often used interchangeably with the world “dictator”.
This argument is often made by the corporate types who have made their money in life and are now looking for some intellectual stimulation through what they consider as philosophical musings.
The argument has gained a new life with the death of Lee Kuan Yew (or LKY as he was commonly known as) who was the prime minister of the city-state of Singapore from 1959 to 1990. Between 1990 and 2011, he was the senior minister as well as minister mentor of Singapore. LKY died on March 23, 2015.
Data from the World Bank shows that the per capita income of Singapore in 2013 was $55,182.5. When LKY took over as the prime minister in 1959, the per capita income was $400. What this clearly tells us is that LKY turned around Singapore from a poor country to a developed country in about one generation. When he became the prime minister, Singapore was basically swamp with almost no natural resources. He turned it around into a global financial centre first and now an entertainment destination as well.
His achievements not withstanding, LKY was an autocrat who was honest enough to admit it. As he said in an interview to The Straits Times in April 1987: “
I am often accused of interfering in the private lives of citizens. Yes, if I did not, had I not done that, we wouldn’t be here today. And I say without the slightest remorse, that we wouldn’t be here, we would not have made economic progress, if we had not intervened on very personal matters – who your neighbor is, how you live, the noise you make, how you spit, or what language you use. We decide what is right. Never mind what the people think.”
But as I have said above LKY’s autocratic style of working paid huge dividends for Singapore. It was transformed from a swamp to a developed country in around 50 years. And that was a huge achievement.
This high growth that Singapore achieved has led people to suggest that India also needs a benevolent autocrat to grow at a fast pace. LKY and Singapore are not the only example that is given to buttress this point. There are other examples as well—Chile under Augusto Pinochet. Or countries like Hong Kong, Singapore, South Korea and Taiwan, which grew at a very fast rate under autocratic regimes. They moved to a democratic form of government only after having grown fast for a significant period of time.
Then there is the example of China. The country is ruled by one party, the Chinese Communist Party (CCP).  It has had a generation of fast economic growth without any democracy. All this has led many people to believe that if a country has to grow fast it needs to be under an autocratic regime. Hence, India needs a “benevolent autocrat,” is the argument offered. QED.
But are things as simple as that? Or are people becoming victims of what behavioural economists term as the “availability heuristic”? As John Allen Paulos writes in
A Mathematician Reads the Newspaper: “First described by psychologists Amos Tversky and Daniel Kahneman, it is nothing more than strong disposition to make judgements or evaluations in light of the first thing that comes to mind (or is “available” to the mind).”
So, Lee Kuan Yew was an autocrat. Under him Singapore grew at a very rapid rate. Hence, India needs a benevolent autocrat as well, if it has to grow at a very fast rate. That’s how it works for those who feel that India needs a “benevolent autocrat”.
Economist William Easterly has done some interesting research in this area, which he summarises in a research paper titled
Benevolent Autocrats. As he writes: “The probability that you are an autocrat IF you are a growth success is 90 percent. This probability seems to influence the discussion in favour of autocrats.”
But that is the wrong question to ask. The question that needs to be asked should be exactly opposite—if a country is governed by an autocrat what are the chances that it will be a growth success? “T
he relevant probability is whether you are a growth success IF you are an autocrat, which is only 10 percent,” writes Easterly. To put it simply—most fast growing nations are ruled by autocrats. Nevertheless, most autocracies do not grow fast.
The thing is that one never knows whether an autocrat will turn out to be benevolent or will he turn out to be an out an out dictator, once he starts to rule. That depends on the luck of the draw. Most autocrats usually end up screwing up the economies they rule. This is a simple point that middle class Indian men who want a “benevolent autocrat” to rule this country, need to understand.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Firstpost on Mar 30, 2015