TIME India

Narendra Modi: The New Face of India

Modi Story on Economy of GujaratAssignment ID: 30156522A
Daniel Berehulak—Reportage by Getty Images The road to victory, Modi greets supporters at an election rally in Gujarat, where he was chief minister

Despite a controversial record, the politician has a historic mandate from voters. Now he must revive the nation’s fortunes and reset ties with friend and foe alike

It’s just past noon on a cloudless day in Ghazipur, a city in the Indian state of Uttar Pradesh, and a stream of Narendra Modi supporters is making its way to one of the candidate’s last election rallies. Undeterred by the 111°F (44°C) heat, the crowd, festooned in saffron, the hue of Modi’s Bharatiya Janata Party (BJP), winds along the small town’s unkempt streets and open sewers. Gyan Prakesh Singh, a doctor, points to a pool of raw sewage. Like so many others on their way to the rally, Singh is counting on Modi to improve life in his hometown–and across India. “This is the first time I’ve gone to listen to a politician,” says Singh. Someone in his group shouts, “Modi is God’s choice.”

He certainly is India’s choice. On May 16 the BJP, a Hindu nationalist party, resoundingly won the country’s election, seizing 282 of the 543 seats in India’s lower house of Parliament and crushing the incumbent alliance led by the Congress Party. Though the BJP got just 31% of the popular vote, in terms of seats it was the biggest victory for a single party in decades. (In recent years, only coalitions, cobbled together and often unwieldy, have been able to secure parliamentary majorities.) As the longtime chief minister of the prosperous western state of Gujarat, Modi, son of a tea seller and born into a low caste, had already achieved remarkable political success. Now he will become India’s 14th Prime Minister, capping an improbable rise from poverty to the nation’s top job. “His image says, If I can make it, I can help you make it,” says Sudarshan Iyengar, an economist in Gujarat. “The country has given him a free mandate.”

That mandate, according to Modi and his acolytes, is nothing less than to restart India. Modi, 63, who rode a wave for change, takes over at a time of great anxiety for Indians. Their country is the largest democracy on the planet, with a stellar record of peaceful transfers of power. India is the world’s 10th biggest economy, according to the World Bank, and was once seen as an emerging geopolitical player comparable to mighty China. But today, India’s economy is weak, its vision as a nation is unclear, and its collective mood is grim. A Pew survey released in March showed that 70% of Indians were dissatisfied with their country’s direction and worried about inflation, unemployment and an underperforming government, among other concerns. Those who voted for Modi and his BJP want them to give India back its economic mojo, and Modi is confident he can deliver. In speech after campaign speech, he told Indians that their everyday problems–a job shortage, shoddy electricity, high food prices, corrupt cops–were fixable. Says Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics: “That’s the bet–that he’s going to do things.”

Modi doesn’t have a hard act to follow. The Congress Party, which had led the two coalition governments since 2004, imploded, plunging from 206 seats in the 2009 election to just 44. The chief reasons: soaring inflation, the floundering economy and a series of corruption scandals involving high officials. But the electorate also seemed tired of old elite politics, embodied by Congress president Sonia Gandhi and her son Rahul, who led the party’s campaign. The election featured millions of young, first-time voters for whom performance trumped legacy or loyalty to a political clan. (Rahul’s father, grandmother and great-grandfather were all Prime Ministers.) “This was a complete rejection of the dynastic [system],” says Mohan Guruswamy, a visiting fellow at the New Delhi–based Observer Research Foundation.

Yet Modi doesn’t enjoy unequivocal support. He rose through the BJP ranks first via the Rashtriya Swayamsevak Sangh (RSS), a right-wing feeder group for the party. Although Hindu nationalism was not a Modi campaign plank, he has found it hard to shake the perception that he is ambivalent toward India’s Muslim minority, largely because of what happened in Gujarat in early 2002. Bloody riots broke out between Hindus and Muslims in the state not long after he became chief minister. More than 1,000 people, most of them Muslims, were killed in the violence. Modi’s critics say his administration did not do enough to stop the riots; Modi has always denied this, and he has been cleared by Indian courts of any wrongdoing. Now many in India, Muslims as well as non-Muslims, are wary of a Modi-led government, fearing that it may embolden Hindu chauvinists or that it will aggravate the country’s religious polarization. Another of his critics’ grievances: that his decisiveness as a leader–much touted during the campaign–is a euphemism for an autocratic leadership style. “He’s a doer. You can push people to a point,” says Guruswamy. “But how long will that last? Six months? Eight months?”

Economy, Economy, Economy

Modi will be judged, above all, on his ability to revive the economy; he has repeatedly said that’s a top priority. From 2005 to 2007, India grew at a rate of over 9% a year. Now it’s barely 5%, a figure Western countries would love to have but one that is not enough for India, which, given its size, must generate millions of new jobs every year. Retail inflation, at about 8.6%, is high, and the fiscal deficit wide. While India was vulnerable to the Great Recession in 2008 and 2009, many also blame Congress for inaction and inability to pass pro-business reforms.

Modi has a reputation as an economic miracle worker based on his record running his state. From 2006 to 2012, Gujarat’s average annual growth rate was 10%–higher than the national average of 8.45% but, critics point out, lower than in other wealthy states like Tamil Nadu and Maharashtra. Gujarat, a longtime trading hub, has always excelled at trade and business; under Modi, the state acquired an international reputation as a place in India that worked, particularly for investors. Electricity, essential for industry, was plentiful, red tape was minimal, and officials were accessible. Modi’s fans include tycoons Mukesh Ambani and Ratan Tata, two of the most powerful men in Indian business. When early election returns flagged a big Modi victory, Mumbai’s stock-market index spiked.

To scale up his successes in Gujarat (pop. 60 million) across India (pop. 1.2 billion), Modi will need to pull together many competing interests, not just in New Delhi, where he is a political outsider and neophyte, but also in state capitals, which wield much power under India’s federal system of government. The BJP’s parliamentary muscle, plus the seats of its allied parties, will help. Much of the paralysis in recent years in the national legislature over tax reforms and other ways to draw new foreign investment was political: opposition MPs simply stalled.

A clear majority in Parliament’s lower house “means more reform, more growth and better news for investors,” says Subramanian. But to enact many laws, approval is also required from the upper house, where the BJP does not have a majority and so will have to negotiate with other parties. Stubborn issues–such as trimming or streamlining India’s costly welfare programs and subsidies, privatizing state firms and changing labor laws–may be too sensitive for a new leader to tackle right away.

The BJP seems to realize that the task ahead is tough. “The economy will take some time to [untangle],” says Manoj Ladwa, a senior member of Modi’s communications team. But the Indians who voted for Modi are counting on him to move quickly.

Admirable and Divisive

On results day in New Delhi’s leafy diplomatic enclave, BJP workers and volunteers pass by two elephants adorned with the BJP symbol–an orange lotus blossom–to celebrate outside the party headquarters. Brass bands belt out victory tunes as steaming milky tea is ladled into paper cups. The tea is a nod to Modi’s Chai Pe Charcha, or “Chat Over Tea,” a campaign initiative in which he would talk via video and audio links to voters nationwide at booths serving tea. It’s also a nod to how Modi in his boyhood sold tea on a railway platform. “Narendra Modi started his life in the business of tea,” says Manoj Jain, a BJP volunteer. “Now he’s the Prime Minister.”

That humble start means a great deal to voters in a country where a political elite has run the show for years. It’s not that there hasn’t been progress: under the previous government, poverty officially came down from 45% of the population in 1994 to 22% in 2012. But that’s a matter of how you define poverty. A recent report by McKinsey Global Institute suggests that in 2012 as many as 56% of Indians–some 680 million people–could not afford most basic needs like food, water, housing, sanitation and health care. Modi has pledged to do better. In his May 16 victory speech, he said he would apply his Gujarat motto “Sabka saath, sabka vikaas”–“Everyone’s support, everyone’s welfare”–to the entire country.

It was a message that indirectly sought to reassure India’s minorities, especially Muslims, that they count among the “everyone.” The scars that the Gujarat riots left on the national psyche are not fresh, but nor have they disappeared. Muslims, who make up about 14% of the population, have long fared worse than Hindus across India in metrics like employment, education and access to welfare. Some worry that the right-wing organizations with which Modi has been associated might interpret the BJP’s win as a mandate to assert their desire for a Hindu religious state, not only making things worse for Muslims but also threatening the nation’s secularism, one of its founding principles. “Modi’s a good talker,” says Zubair Shaikh, a 45-year-old Muslim garment-factory owner in Dharavi, a Mumbai slum. “But talk is not secular.”

Others say Modi is too shrewd a politician to let the country become further polarized on his watch. Iyengar, the Gujarat economist, says Modi is acutely aware that any new communal disturbances could be his political undoing. “People will come after him with hammer and tongs,” says Iyengar. Nor would it be good for business. “Maintaining India’s secular credentials will only become more critical to Modi,” says Waheguru Pal Singh Sidhu, a senior fellow at Brookings India. “It’s too much of a risk for [his] development agenda.”

Friends and Neighbors

India already has its share of risk. Sandwiched between an expansionist China and an unstable Pakistan, the country lives in a tense neighborhood. With the U.S. preparing to withdraw most of its troops from Afghanistan this year, there’s a very real chance that terrorists will regain strength, especially along the porous border between Afghanistan and Pakistan. That’s a threat not only to the West but also to India, which has been targeted by Pakistan-based terrorist groups in the past. Though foreign policy wasn’t a focus of his campaign, Modi has lambasted the Congress government for being weak on national security, and it’s not hard to imagine him talking tough to Pakistan, particularly when it comes to the two countries’ ceaseless frontier disputes. (Just days after the election results were announced, an Indian soldier was killed in an ambush near the border in Kashmir.) Still, early signs for dialogue look good: Pakistani Prime Minister Nawaz Sharif has invited Modi to Pakistan, and Sharif has been asked, along with other South Asian leaders, to Modi’s May 26 swearing-in.

India’s other strained relationship is with China. The two countries fought a brief war in the 1960s, have long-standing border disputes and are wary of each other’s growing clout in Asia. A few months ago, while campaigning in Arunachal Pradesh, a northeastern state bordering China, Modi spoke out obliquely against Beijing’s troop buildup in the area. “The world does not welcome the mind-set of expansion in today’s times,” he said, according to Reuters. “China will also have to leave behind its mind-set of expansion.” Very few Asian leaders are as plainspoken about Beijing. Manmohan Singh, Modi’s predecessor, has been much more conciliatory.

Still, the new Prime Minister is unlikely to go much further in antagonizing China. While the U.S. revoked a visa for Modi in 2005 after the Gujarat riots, Beijing rolled out the red carpet in 2011 for a business delegation he led, treating him like a national leader long before most other countries. Modi won’t forget that gesture. He also knows that India needs China to buy more of its goods to reduce the trade deficit between the two countries and that Chinese expertise in building infrastructure could be useful to India. “For anybody above 50, China is the perpetual enemy for the next millennium,” says Dipankar Banerjee of the Institute of Peace and Conflict Studies in New Delhi. But, he adds, “young people want change, and Modi responds to their aspirations.”

Modi will likely strike a balance with the U.S. too. Besides his revoked visa, New Delhi and Washington quarreled more recently over Indian diplomat Devyani Khobragade, whom U.S. authorities arrested in New York City on charges of visa fraud over her domestic helper. Days later, Modi tweeted that he had refused to meet a visiting U.S. delegation “in solidarity with our nation, protesting ill treatment meted to our lady diplomat.” Washington was slower than other Western governments to build bridges with Modi as he became a serious contender to govern India. But when the outcome was certain on May 16, a White House spokesperson announced that Modi “will be welcomed to the United States.” President Obama called India’s new boss to congratulate him and invite him to Washington at a “mutually agreeable time to further strengthen our bilateral relationship.”

The U.S. is not only one of India’s most important trading partners; it also has a large, influential ethnic-Indian population. Each nation needs the other as a counterweight to China and to stave off extremism in Afghanistan and Pakistan. “You can’t wish away the United States,” says Sanjay Puri, chairman of the United States India Political Action Committee, based in Washington. “There’s a real opportunity now, despite everything, for a reset.”

But before that, there’s a triumph to be savored. On May 17, Modi took a victory lap, departing Gujarat and stopping in New Delhi on his way to the Hindu holy city of Varanasi. At BJP HQ in the capital, a small but enthusiastic crowd danced under a shower of marigolds and rose petals. Mishant Singh, 29, a volunteer for the BJP’s youth wing, stood under a tree, waiting for Modi to take the stage. “People aren’t just looking for jobs–they’re looking for a strategy,” says Singh, an information-technology professional. “We’re looking at the next 15 years.” For Modi, the challenge of running India has only just begun.

–With reporting by Zeke Miller/Washington

This appears in the June 02, 2014 issue of TIME.

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