India's election has produced a decisive majority for the Bharatiya Janata Party. Incoming Prime Minister Narendra Modi promises to reinvigorate an economy whose annual growth rates have halved from near double-digit rates in recent years. He has pledged to tackle endemic corruption and create a slimmed-down, more effective state through what he calls "maximum governance, minimal government." A 30 percent surge in India's stock market attests to the combination of hope and faith business has in the new government. Modi cites his record governing the state of Gujarat as an example of the pro-growth management experience he brings to New Delhi. Gujarat has grown faster than China for two decades, produces a quarter of India's exports, and attracts about 20 percent of India's FDI. India is now in the hands of a prime minister who has managed the economy of its most industrialized and globalized state. The world has high stakes in an Indian resurgence that turns it into an engine of global growth.
Restoring economic vigor through good governance and decisive reform is the clear mandate of the new government. Economic growth has plummeted to below 5 percent. Annual inflation is in the range of 10 percent and the government's inherited fiscal situation is precarious. As many as 800 million Indian citizens live on less than $2 a day. In the heady days of the 2000s when its go-go economy was surging ahead at Chinese-style rates of nearly 10 percent--including a few quarters in which India actually grew faster than China--many Indians internalized the notion that their country was destined for economic and geopolitical greatness.
They feel like the outgoing Congress Party government let them down, and have turned to a leader with a demonstrated record of economic competence.
This election may prove a turning point in India's political history. Indian Express editor Shekhar Gupta describes the journey of the Indian voter since 1947 in three stages: from gratitude to the Congress Party for delivering India's independence, to grievance as a result of underdevelopment and stifled opportunity, to aspiration for a better future under conditions of dynamic economic growth. Modi's ascension represents the victory of the aspirational group, now comprising hundreds of millions of Indians and growing every day. Rajiv Kumar of the Center for Policy Research argues convincingly that this group seeking greater economic opportunity has replaced the "petitioning" one seeking government handouts as the prime force in Indian electoral politics.
Indeed, judging by an election result that has delivered a stronger mandate for one party than at any time since 1984--and punished the Congress Party's economic underperformance with its lowest vote tally ever--several decades of rapid economic growth appear to have created a more unitary Indian electorate. Their aspirations for a middle-class future cut across lines of caste, class, region, religion, and the rural-urban divide. This emergent urban and suburban, youthful, middle-class India--the India of 900 million mobile connections--is displacing the old rural peasantry as the decisive demographic. This massive constituency voted overwhelmingly for the change Modi promised. They have extraordinarily high expectations for his government.
The good news is that the drivers of India's long-term growth trajectory remain intact. Despite the slowdown of the past few years, India's economy has expanded by roughly 8 percent annually for the past decade despite the...