‘Modani’ model of Business-Politics Nexus

Modani has entered India’s political lexicon. Rahul Gandhi’s latest tweet adopts this expression, already in vogue in his party’s social media campaign “Hum Adani ke Hain Kaun” and in the parliamentary chorus by the opposition demanding for a JPC on the Adani imbroglio.

I can claim a small hand in popularizing this expression, through videos, social media posts and an article after the Hindenburg expose. But I did not coin this term. I first heard it from my friend from Madhya Pradesh- farmer, activist and socialist leader Dr. Sunilam, who has been using it for a few years. Laljibhai Desai, the President of Congress Seva Dal and my fellow traveller during the Bharat Jodo Yatra, told me that he coined this word when Narendra Modi was the CM in Gujarat. Thankfully, folk songs and political slogans remain ‘copyleft’.

Modani is a slogan, a clever word-play, a political weapon that helps to shift the focus of the opposition from a personalized and ineffective attack on the PM to a sharper critique of his alleged nexus with big business. Clubbing Modi and Adani in the same word is a brilliant rhetorical device to establish the proximity that both of them enjoy. This can hit hard in our political culture sensitive to allegations of ‘suit-boot ki sarkar’ (and for an earlier generation ‘Tata Birla ki sarkar’).

But Modani is not just a cuss word. It is, at least potentially, a concept that describes and analyses what it critiques. This stands for the latest phase in India’s political economy, the specific variety of deep linkages between economic and political power that characterize the present government, which may well go beyond Modi and Adani. I suspect this concept is here to stay and merits an elaboration.

Now, there is nothing new about the linkages between business and politics. These go back to the beginning of Indian democracy, or even earlier if you look at the history of our freedom struggle. The very first decade of our democratic politics witnessed major political scandals involving the clandestine links of political leaders and businessmen. From the downfall of Pratap Singh Kairon and the hushed-hushed Nagarwala scandal to Bofors, 2G and Rafael, allegations of corruption involving a nexus between business and politics have been the staple of Indian politics.

Capitalist democracy houses a fundamental contradiction: democracy pushes for political equality while capitalist economy pulls it in the opposite direction.

A recent academic volume, Business and Politics in India, edited by Christophe Jaffrelot, Atul Kohli and Kanta Murali helps us to understand how the relationship has changed over the years. Different essays in this book track the changes in this relationship across time, states and sectors. The editors characterize the period upto 1990 as the phase when business exercised ‘selective veto’ in matters that directly concerned their commercial interests over political decision-making. After liberalization in 1991, we entered the second phase, where the influence of business expanded to ‘general agenda setting’ of country’s policies. The scholars in this volume agree that business-politics linkage has entered a still deeper phase with the coming to Narendra Modi to power in 2014. They characterize it as the phase where business exercises ‘partial hegemony’ over governmental policies and party politics. Modani could serve as a popular name for this latest phase.

Let us notice some features of this Modani model. First of all, this represents an open and direct association between political leaders and businessmen. This is in contrast to the hypocrisy of the so called socialist state (there was none, ever) days when the relationship with businessmen was kept under wraps. Now business interests are openly seen as stake-holders not just in economic policy but also in health and agriculture. The images of Narendra Modi flying in Adani’s plane and Gautam Adani in the PM’s plane are only an acknowledgment of this sea-change in our public culture.

Second, the Modani model represents a shift from pro-market policies to selective pro-business politics. You could call this crony-oligarchic capitalism that goes against the spirit of open market competition. The adjective “crony-oligarchic” is not just the usual leftist expletive. I draw this from Pranab Bardhan, the most astute scholar of India’s political economy. Last year, before the Adani expose, he wrote an essay “The New India: A Political-Economic Diagmosis” [link] where he updated his understanding of India’s political economy to take into account the changes during the Modi government. According to him India is now a “low-productivity oligarchic-autarchic economy”.

The point to note here is that this phase has not and cannot produce a true global champion that can compete in international market. Most of the crony oligarchs mainly operate in non-traded goods or highly regulated ‘rent-thick’ sectors. Political patronage saves them from external competitions in the name of atmanirbhar Bharat and brazenly favours them to eliminate domestic competition as well. This goes beyond the earlier practice of selective favours being dished out to favourite businessmen. Harish Damodaran calls it “Conglomorate Capitalism” [link: Seminar, no. 734, 2020].

The third feature is a sharp rise in a new kind of inequality. Now, capitalism does not pride itself on equality, nor are we a country that can claim to practice equality, be it gender or caste or class. The recent World Inequality Report [link] and the Oxfam report are but the latest reminder of the extent of inequality that is on the rise in our country. The Modani model has institutionalized inequality in a new way. To fall back on Pranab Bardhan again, our kind of inequality generates a “Latin American-style ‘conclave economy’, where a limited sector caters to an affluent elite demanding relatively capital-intensive and skill-intensive goods, whereas much of the general economy suffers from insufficient demand and underutilization of capacity, and thus low aggregate investment and employment.” Recently, Viral Acharya, the former Deputy Governor of the RBI has drawn attention to the role of the Big Five — Reliance, Tata, Aditya Birla, Adani and Bharti – in charging artificially high prices and pushing up inflation. This form of inequality comes in the way of even the economic growth that capitalist economy aspires to achieve.

Fourth, Modani model is about a new kind of politically patronized anti-environmentalism. This is no secret that notwithstanding its rhetoric on environment and occasional greenwashing (mainly on solar energy, mainly to favour Adani), this government has systematically undone many environmental safeguards built over the last four decades. Ashish Kothari, the country’s leading environmental activist, holds the present government responsible for unleashing “environmentally illiterate processes”.

Finally, all this does not make the Indian state a weak state, unlike what the Marxist theory would have us believe. For a better understanding of the political economy under Narendra Modi, we should read Karl Marx’s own reflections on Louis Bonaparte instead of reading the stylized theories of state propounded by Marx’s followers. Collusion with business does not make Narendra Modi a weak ruler. We are witnessing the rise of a strong, extractive, rent-seeking politics that lords over the capitalist class instead of meekly submitting to them.

Capitalist democracy houses a fundamental contradiction: democracy pushes for political equality while capitalist economy pulls it in the opposite direction. Modani model brings out this carefully concealed contradiction out in the open and forces us to confront an unpleasant question. Are we witnessing a deep transition in the business of politics, from politics of business to politics as business?