(Adds background on riots, additional reporting credits)
By Frank Jack Daniel and Rajesh Kumar Singh
NEW DELHI, April 6 When Indian opposition leader
Narendra Modi gave a speech on the virtues of smaller government
and privatisation on April 8 last year, supporters called him an
ideological heir to former British Prime Minister Margaret
Thatcher, who died that day.
Modi, favourite to form India's next government after
elections starting on Monday, has yet to unveil any detailed
economic plans but it is clear that some of his closest advisers
and many campaign workers have a Thatcherite ambition for him.
These supporters dismiss criticism of Modi for religious
riots that killed some 1,000 people in his home state of Gujarat
12 years ago. For them, Modi stands for economic freedom.
"If you define Thatcherism as less government, free
enterprise, then there is no difference between Modi-nomics and
Thatcherism," said Deepak Kanth, a London-based banker now
collecting funds as a volunteer for Modi's Bharatiya Janata
Kanth, who says he is on the economic right, is one of
several hundred volunteers with a similar philosophy working for
Modi in campaign war-rooms across the country. Among them are
alumni of Goldman Sachs and JP Morgan trading floors.
"What Thatcher did with financial market reforms, you can
expect a similar thing with infrastructure in India under Modi,"
he said, referring to Thatcher's trademark "Big Bang" of sudden
financial deregulation in 1986.
Modi's inner circle also includes prominent economists and
industrialists who share a desire to see his BJP draw a line
under India's socialist past, cut welfare and reduce the role of
government in business.
The BJP is due to unveil detailed economic plans on Monday
and is expected to make populist pledges to create a massive
number of manufacturing jobs and to restart India's stalled $1
trillion infrastructure development programme.
But conversations with top policy advisers to Modi suggest
an agenda that goes further than the upcoming campaign
manifesto, including plans to overhaul national welfare
programmes. There is also a fierce debate inside his team about
privatising some flagship state-run firms, including loss-making
Bibek Debroy, a prominent Indian economist speaking for the
first time about his role advising Modi during the campaign,
told Reuters the Hindu nationalist leader shared his
market-driven policy platform and opposed handouts.
"It is essentially a belief that people don't need doles,
and don't need subsidies," Debroy said. Instead, the government
should focus on building infrastructure to ease poverty, he
Modi's office did not respond to requests for comment on
this article. Senior BJP leader Arun Jaitley, the man often
tipped to be the finance minister in a Modi cabinet, said the
party would not do away with welfare programmes entirely.
"I don't want to immediately comment on what we will do with
each one of them," Jaitley said. "India will need some poverty
alleviation schemes, at least in the immediate future, but you
could link those schemes with some asset creation."
How far Modi can go down this road if elected will depend on
allies in what is likely to be a coalition government. In the
last big poll ahead of the election, the BJP was forecast to end
up as the single largest party but fall short of an outright
But merely the possibility that India may move to the right
has brought free-market champions flocking home from high-flying
careers abroad to join Modi's campaign.
Two advisers involved in policy discussions within the BJP's
top leadership said partial or total privatisations of Air India
and other failing public sector enterprises were being debated.
"We don't foresee any problems in selling a stake in Air
India. It is one of those low-hanging fruit," said one of the
economic policy advisers, who spoke on condition of anonymity.
Mammoth Coal India, the source of much of the
country's electricity generation, is not seen as an easy
privatization target, they said.
Possible opposition by allies in government and India's
strong labour laws mean that some of these policies will take
"If you say is it going to happen in 2014-15, is the finance
minister going to stand up and announce privatisation, I'm
inclined to think no, but will it figure eventually? The answer
is yes," said Debroy, author of a book on the economy of
Gujarat, the western Indian state Modi has governed for more
than a decade.
When asked about the possible privatisation of Air India,
Jaitley said only that it was a difficult issue.
An attack on welfare would mark an ideological shift.
Although India adopted free-market reforms 20 years ago, the
man responsible for them, current Prime Minister Manmohan Singh,
has refocused on redistribution of wealth in recent years under
the influence of Congress party chief Sonia Gandhi.
The battle of ideas between Modi and the ruling Congress
party was mirrored in a public spat between two well-known
economists of Indian origin, Nobel laureate Amartya Sen and
Columbia University's Jagdish Bhagwati.
Sen's belief that public spending on food subsidies and
health was needed to end poverty was adopted by Gandhi. The
result was a proliferation of welfare schemes, most notably a
rural work programme and a giant subsidised food plan.
Modi's economic thinking is closer to Bhagwati, who strongly
advocates poverty reduction through deregulation-led growth.
Bhagwati's colleague and writing partner, Arvind Panagariya, a
former chief economist at the Asian Development Bank, is tipped
by some in the BJP for a role in any Modi government.
The Congress party's rural job scheme is credited with
lifting rural wages and reducing migration to cities. But
critics, including Panagariya, believe the jobs it created -
such as maintaining irrigation ponds and village roads - were
These ideas have found traction in Modi's circle of
advisers, who propose tying such programmes to skills training
and putting employees to work on building highways or sanitation
Others in the group propose doing away altogether with
dozens of centrally funded programmes.
The parallels with Thatcher don't end with economics.
Like her, Modi is a small-town outsider to the capital's
political circles and has a reputation for riding roughshod over
opponents, who often pillory him as authoritarian. In Gujarat,
critics say he runs a one-man government.
For better or for worse, many Indians fed up with years of
weak leadership, find that no-nonsense image part of his appeal.
"We need action, a do-er," said Kanth. "We have seen enough
of pussyfooting in the last 10 years."
(Additional reporting by Shyamantha Asokan, Nidhi Verma and
Doug Busvine; Editing by Raju Gopalakrishnan and Mark Bendeich)