Table of Contents

Addressing the global business elite at the 2018 World Economic Forum in Davos, Switzerland, Indian Prime Minister Narendra Modi placed India firmly in the camp of globalization and free trade. Echoing a speech delivered by Chinese President Xi Jinping at the same forum a year earlier, Modi suggested that India could be a standard-bearer for globalization and provide global leadership for trade liberalization. Touting the “radical liberalization” of the country’s foreign direct investment (FDI) regulations, Modi had boasted in 2016 that India was “the most open economy in the world for FDI.”1

But not all members of the Sangh Parivar—the Hindu nationalist Rashtriya Swayamsevak Sangh (RSS) and its affiliate organizations, of which Modi’s Bharatiya Janata Party (BJP) is one—shared the prime minister’s enthusiasm for foreign investment. The Swadeshi Jagaran Manch (SJM), an economic affiliate of the historically protectionist RSS, vehemently opposed liberal FDI norms, arguing that “FDI has done more bad than good to the economy.”2 The Bharatiya Mazdoor Sangh (BMS), the RSS’s labor union affiliate, has contended that economic reforms have led to “jobless growth” and an “increase in [the] trade deficit,” and has demanded that the government should “stop forthwith the economic and labour reforms based on [l]iberalisation, [p]rivatisation and [g]lobalisation.”3 The degree of government intervention in economic activity, especially the role of foreign investment, has emerged as a major fault line within the Sangh Parivar and between the BJP and other members of the Sangh.

The Sangh’s protectionist reputation notwithstanding, the leadership of the RSS—which serves as the ideological fountainhead for the entire Hindu nationalist movement—has been content to let multiple points of view coexist, preferring to mediate the policy differences among the BJP and the RSS’s economic affiliates on a case-by-case basis.

Gautam Mehta
Gautam Mehta is a recent graduate of the Johns Hopkins School of Advanced International Studies (SAIS).

The BJP started as a political party with autarkic instincts, supporting foreign investment only in high-tech sectors, a stance illustrated by the pithy slogan “computer chips but not potato chips.”4 Over time, particularly during the tenure of former prime minister Atal Bihari Vajpayee, the party began to favor liberal economic polices—best exemplified by its decision to abandon a long-standing ideological totem to propose foreign investment in retail.5 The selection of the business-friendly Modi, who campaigned on a platform of welcoming foreign investment and who was less enamored with the virtues of small, family-run businesses, suggested that the BJP was evolving into a more conventionally center-right political party, and that the party was moving away from the statist and autarkic proclivities of the Sangh.

The RSS’s own economic ideology, which has often been caricatured as “communism plus cow,” has also evolved.6 While the RSS has softened its once implacable opposition to globalization and economic liberalization, its current economic philosophy is best summed up as populism with Indian characteristics. The RSS’s economic populism entails a tilting of the economic playing field in favor of small businesses, which the organization believes are upholders of traditional norms of morality and for whom workers’ welfare is at par with pecuniary considerations. The RSS emulates Western populist parties in its aversion to globalization and to foreign cultural influences. Yet the RSS’s belief that it is an individual’s dharma duty to imbue consumption with morality and to share his or her wealth with less privileged citizens lends the RSS’s brand of populism a distinctive Indian character.

But political exigencies, as the case studies below demonstrate, and pressure from the Sangh has helped push the BJP government’s economic policies in a more populist direction, especially in the last two years of its tenure. The increased convergence between the Sangh’s economic populism and the government’s own policies—exemplified, most recently, by a government decision that would hinder the e-commerce operations of Flipkart (a company majority-owned by Walmart) and Amazon—led the BJP to dilute, deemphasize, or even abandon some of its more market-friendly campaign promises.

Still, the influence of the Sangh on the BJP is not unidirectional. In many cases, Sangh affiliates certainly do shape government policy. In other instances, the BJP government itself has influenced the thinking of its fellow travelers within the Sangh, bringing them closer to its point of view. Furthermore, even in instances when the RSS and the Sangh have had a material impact on policy formulation, not all of these policy changes have ultimately been adopted. The influence of the Sangh, while potent, must still contend with contextual factors such as domestic politics, foreign influence, and state capacity.

There has been a noticeable policy convergence between the BJP and the Sangh on many economic matters.

Irrespective of the direction in which this causality appears to run, there has been a noticeable policy convergence between the BJP and the Sangh on many economic matters. This convergence is not only shaping the BJP’s 2019 election campaign, but it will also likely define a putative second term for the BJP if the party returns to power. The BJP’s 2019 campaign will likely focus less on employment generation and more on expansion of the welfare state, through measures such as an expansive income support for farmers and a publicly financed universal health insurance scheme.

Swadeshi Roots of the Sangh

For much of its history, the RSS vehemently opposed globalization. The Akhil Bharatiya Karyakarni Mandal (the organization’s executive council) declared in 1998 that “it is well known that the [RSS] has always been in favor of swadeshi which connotes self-reliance and economic independence.”7 The RSS has long feared that foreign investment would infuse culturally alien values of consumerism and hedonism into the national bloodstream and that globalization would be accompanied by foreign cultural influences that they believe could lead to a deracination of Indian society.8 The SJM was established in 1991 to advocate for economic self-sufficiency—the same year India embraced greater economic liberalization, which reduced import tariffs and opened up the economy to greater foreign investment. In a 2018 interview,9 SJM co-convener Ashwani Mahajan asserted that foreign investment leads to the ceding of economic sovereignty to multinational corporations and the further impoverishment of the poor. The SJM, as the resolution approved at its 2010 national convention makes clear, is particularly wary of the impact of a liberalized trade and FDI regime on small businesses.10

Meanwhile, the BMS emerged as a strident opponent of globalization and an advocate of pro-worker labor policies. The union recommended in 2001 that the Indian government pursue economic independence by collaborating with other developing countries to come up with an alternative to the World Trade Organization (WTO). The BMS consistently has opposed proposals by BJP governments that would make it easier for businesses to lay off workers. Similarly, the Bharatiya Kisan Sangh (BKS), the RSS’s farmers’ union, has vocally opposed genetically modified (GM) food, likening it to “food colonialism and slavery.”11 Perhaps hyperbolically, the BKS claimed that “the GM nexus [read: multinational corporations] is working against the sustainability of the human race.”12

In recent years, the Sangh’s economic views have evolved. As a (small-c) conservative organization, the RSS has seen its views change in evolutionary, not revolutionary, ways. Historically, the RSS viewed politics as morally corrupting, socially divisive, and inimical to its goal of “unit[ing] the Hindu society” through bottom-up social change.13 More recently, the RSS has increased its involvement in electoral politics, most prominently during the 2014 elections when the body used its organizational network to help the BJP attain political power. As Dattatreya Hosabale, one of the RSS’s joint general secretaries, has noted, the Sangh “would want the BJP to win all the state elections because only then can significant social, political and cultural changes take place in this country.”14

The recent expansion of the RSS has been driven by an influx of members of upwardly mobile social groups who do not necessarily share the statist and autarkic proclivities of the SJM and the BMS. As such, changes in the RSS’s social composition and the electoral imperatives of its political affiliate (the BJP) have softened the RSS’s once immutable opposition to FDI. The evolution of the RSS’s economic philosophy was evident when Mohan Bhagwat, the RSS’s sarsanghchalak (chief), declared in 2013 that the RSS was “not bound by dogma.”15 Allaying apprehensions over the organization’s alleged antediluvian views, Bhagwat said that the RSS understood that changes in the global economy meant that the organization’s viewpoint is “evolv[ing] over time.” Unlike in the past, the RSS leadership no longer delivers diatribes against globalization and its malign cultural influence. The RSS’s support for the business-friendly Modi as the BJP’s prime ministerial contender in 2013 also suggests that it has shed some of its swadeshi shibboleths.

The RSS has rejected both capitalism and communism as culturally alien and unsuitable to the Indian milieu. While the RSS shares many of the statist inclinations of the Indian left, the RSS has consistently been wary of an excessive role for the state in shaping society. The RSS’s 2015 annual report exhorted the newly elected BJP government to conceptualize the economic development paradigm “in light of Indian values.”16 Bajrang Lal Gupta, an influential RSS ideologue and a former economics professor, argued that India’s development framework must be leavened with dharma (duty).17 More specifically, as was evident in Bhagwat’s 2017 Vijayadashami speech, which is akin to a State of the Union address for the Sangh Parivar, the RSS’s economic populism entails that the economic playing field be tilted in favor of small enterprises. In his speech, Bhagwat called for “decentralized economic production.”18 Expounding on the theme of economic decentralization, Gupta argued that the family is best suited to be the unit of economic activity and proposed that the economy be organized into self-sustaining “agro-industrial” clusters of ten to fifteen villages with primacy accorded to agriculture and indigenous enterprises.19

The RSS’s fondness for small family-owned businesses stems from its belief that these enterprises treat employees as an extension of the owners’ family, with a concern for employee welfare on par with pecuniary considerations. The RSS’s suspicions of large enterprises, even those owned by domestic entrepreneurs, originate from the view that these businesses emulate multinational corporations and promote hedonistic consumption.

Bhagwat’s April 2018 speech to Mumbai business elites at the Bombay Stock Exchange was perhaps the clearest enunciation of the latest incarnation of the RSS’s economic philosophy. In that address, Bhagwat said that the RSS was not wedded to any economic “isms,” and that the yardstick to judge an economic policy should be whether its benefits reach the poor.20 The RSS has long been a votary of greater welfare spending and economic egalitarianism. Both the SJM and the BMS, which were founded by Dattopant Thengadi—arguably the Sangh’s most influential economic ideologue—believe that the ratio of the average incomes of the top relative to the bottom of the income spectrum should not exceed 10:1.21 The RSS’s 2015 annual report exhorts the BJP government to prioritize the needs of rural areas as well as Scheduled Castes (Dalits) and Scheduled Tribes (Adivasis), two historically disadvantaged minority groups.22 In addition, Bhagwat has argued that, while Hinduism is not an ascetic faith that frowns on wealth creation, an individual’s economic conduct should be mediated by dharma. The preoccupation with the individual, which is inspired by the RSS’s belief in the durability of bottom-up social change, lends the organization’s economic populism a distinctive Indian character. Imbuing consumption with morality, Bhagwat argued that an individual’s major goal in life should not be wealth accumulation or sybaritic consumption, and he urged that the rich should share their wealth with other less privileged citizens.

Echoing Bhagwat, an editorial in the RSS’s mouthpiece, the Organizer, argued that individuals’ dharma was to use their wealth magnanimously by sharing it with the rest of society.23 As such, social justice was the responsibility of both individual citizens and the government. In his 2014 Vijayadashami address, Bhagwat asserted that encouraging domestic entrepreneurship is as much the responsibility of individuals as it is of the government.24 According to this viewpoint, consumers should make sacrifices by purchasing indigenously manufactured products, even if they are more expensive. In its 2011 annual report, the RSS asserted that consumerism and self-aggrandizement were the root causes of corruption.25

The BJP’s Economic Evolution

The evolution of the RSS’s economic philosophy was mirrored by its political affiliate, the BJP. For much of the post-liberalization era, the BJP’s swadeshi wing was more prominent. As recently as 1996, the BJP’s election manifesto, while welcoming foreign investment in high-tech sectors, asserted that “when foreign savings have to supplement and assist the economy in circumstances where domestic savings are inadequate, we compromise with the nation’s long-term interests.”26 Much like the RSS, the BJP also supported decentralized production and an economic policy that tilts the playing field toward family-owned small businesses.

The BJP’s swadeshi wing was gradually sidelined during the tenure of previous BJP prime minister Vajpayee. The governing coalition’s dependence on BJP allies for its political survival forced the National Democratic Alliance (NDA) government under Vajpayee to sideline contentious cultural issues, including the Sangh Parivar’s long-standing goals of constructing a Ram temple on the site of a demolished mosque in Ayodhya and ending the autonomous status of the state of Jammu and Kashmir.27 Western sanctions on India following the country’s 1998 nuclear tests increased foreign investors’ risk aversion toward the country and crimped foreign capital inflows.28 The economic fallout of the Asian financial crisis also required India to undertake deeper structural reforms to attract investment. The BJP’s 1999 election manifesto noted that the party “welcomes foreign investment.”29 There were, to be sure, political considerations that drove an evolution in the party’s economic ideology—particularly, the BJP’s attempt to position itself as a party for India’s growing middle class.30 Much to the dismay of some within the Sangh Parivar, the Vajpayee government opened up sectors such as insurance and media to foreign investment and privatized state-owned enterprises. Expressing his ire, Thengadi called Yashwant Sinha, who was then serving as finance minister, a “criminal” and labeled his policies “anti-national.”31

When serving in an opposition role, however, the BJP has opportunistically decried further economic liberalization—such as when it objected to the Congress Party’s proposed opening of the retail sector to foreign investment. The dynamic shifted once more with the BJP’s decision to choose the business-friendly Modi as its candidate for prime minister, which further marginalized the party’s swadeshi wing. During the election campaign, Modi declared that “government has no business to do business,” an assertion that raised the prospects (once he won) that his government might privatize India’s often inefficiently run state-owned enterprises—something that had been verboten in Sangh circles since India’s economic liberalization in 1991.32

The BJP’s attitude toward FDI during the 2014 campaign was best summed up by the prime minister’s promise of “red carpet, not red tape” for foreign investors.33 The party’s 2014 election manifesto suggested that, unlike the RSS, the party was less enamored with the virtues of family-owned small businesses. The manifesto promised to eliminate fetters for the private sector so that Indian companies could be globally competitive. Much to the consternation of the Sangh Parivar’s economic nationalists, the Modi government has increased FDI limits across sectors and eased regulatory burdens on foreign investors, moves that seem to have paid off in the form of a sharp increase in FDI inflows from $36 billion in 2013–2014 to $62 billion in 2017–2018.34 BJP chief ministers, even those with an RSS provenance such as Haryana’s Manohar Lal Khattar, have made attracting foreign investment a key part of their agendas. Certain BJP state governments have implemented business-friendly regulatory changes, including the reform of onerous labor laws.35 More recently, as the 2019 general election has approached, political expediency as well as pressure from the Sangh have shifted the government’s policies in a more populist direction in some cases.

Evaluating the Sangh’s Influence

Over the past decade, the discourse over economic policy within the Sangh Parivar shifted from bromides against cultural colonialism and a nebulous foreign hand to more pragmatic policy analysis, with various economic affiliates playing a critical role. Over the past decade, the expansion of the Sangh has largely come from growth in the membership of RSS affiliates—the BJP, most prominently, but also the economic affiliates such as the BMS, the BKS, and the SJM.36 The economic affiliates have been a means for the Sangh to penetrate different facets of India’s associational life and reach out to nontraditional constituencies. However, contrary to the popular assertions made by certain Indian media outlets, the Sangh Parivar is only one of the voices that shape government policies.

Three policy cases—land acquisition legislation, royalties for GM seeds, and the government’s November 2016 demonetization push—help illustrate which mechanisms the Sangh Parivar uses to influence BJP government decisions and how the latter seeks to shape the former’s thinking as well. These cases and some recent decisions by the government help explain, at least in part, the government’s recent shift toward economic populism—a convergence that is shaping the BJP’s 2019 election campaign. The more recent decisions of the BJP government bear an unmistakable stamp of Sangh Parivar ideology, although it would be churlish to deny that the government’s thinking has also been shaped by contextual factors such as domestic politics and international influence—often leading to policy dissonance.

Land Acquisition

Economists have long argued that the cost and difficulty of acquiring land is a significant impediment to rapid industrialization, a key part of Modi’s Make in India initiative. Some background on the history of eminent domain in India provides a useful context for understanding how Modi’s government attempted (but ultimately failed) to amend India’s land acquisition law. While the particulars of how and to what extent the RSS shaped the BJP government’s attempt to rework the ultimately unsuccessful land acquisition bill are shrouded in secrecy, it is evident that the RSS and its Sangh affiliates were an important constituency whose suggestions factored importantly in the government’s decisionmaking during the policy process.

Prior to 2013, the eminent domain powers of the Indian government were regulated by colonial-era laws that were prone to favoritism and abuse.37 The political backlash against the abuse of the government’s powers prompted the previous Congress-led United Progressive Alliance (UPA) government to pass legislation that proscribed eminent domain powers from being used to acquire land for private companies and increased compensation to landowners in cases of involuntary land acquisition.

By 2014, it was clear that the safeguards in the UPA-passed land acquisition law, however well intentioned, were making the process of acquiring land for industrial use and infrastructure cumbersome and costly. In late 2014, the new BJP government issued an ordinance—a presidential decree—to jumpstart the process of amending the law to speed up the acquisition of land for public purposes, such as infrastructure.38 While the impact that the presidential decree had in terms of speeding up industrialization in India is debatable, the proposed legislation by parliament that followed was perceived as a signal of the new government’s reformist credentials. The BKS, the RSS’s farmers’ union affiliate, disagreed with the original amendments that the BJP government put forth, which it portrayed as antithetical to farmers’ interests.39 Other RSS economic affiliates, the BMS and the SJM, also opposed the legislation, which they perceived as favoring large corporates at the expense of farmers. Although the government’s efforts to change the law in the end failed, this case is nonetheless an apt lens for examining the manner and mechanisms through which the Sangh Parivar influences government policy.

The RSS leadership intervened to mediate the differences among its affiliates. Hosabale, whose influence is greater than his position in the leadership hierarchy would suggest, said that the RSS affiliates should bridge their differences “in a spirit of coordination and not confrontation.”40 Recognizing the Modi government’s imperative to ensure growth and generate employment rapidly, an RSS leader defended the move: “[The] BJP’s whole development promise hinges on land acquisition. If the party is unable to push it, it will end up cutting a sorry figure. More so, if the problem is posed by the Parivar’s own organisations.”41

To bridge the differences among various RSS affiliates over the land acquisition issue, representatives of the BKS met Amit Shah (the BJP’s president), Ramlal (the RSS pracharak, a full-time worker who is also a general secretary of the BJP and the liaison between the RSS and its political affiliate), and Ram Madhav (a former RSS pracharak who was seconded to the BJP as its general secretary) in a meeting brokered by the RSS. The government subsequently included nine amendments to the land acquisition legislation, many of which incorporated suggestions from the BKS and other RSS affiliates.

The BKS diluted its public opposition to the BJP’s proposed changes to the land acquisition law after some of its suggested changes—a requirement to obtain the consent of at least 80 percent of landowners for the government to acquire land on behalf of private parties and mandatory social impact assessments—were incorporated in the legislation.42 Later, the BKS compromised even further, agreeing to lower the minimum consent threshold to 51 percent and abandon the idea of social impact assessments altogether.43

Unfortunately for the government, it lacked a numerical majority in the upper house of the Indian parliament and, due to implacable resistance from the opposition, had to abandon its efforts to pass a national legislation to speed up land acquisition. In the end, while the Sangh did shape the government’s approach, the BJP could not round up sufficient support from the opposition to push the bill through parliament.

The ultimately futile efforts to amend the land acquisition law made Modi more circumspect in implementing radical economic reforms. Chastened by its inability to ease land acquisition norms, the Modi government adopted a more incremental approach to factor market reforms. The Modi government’s retreat was hastened by Congress leader Rahul Gandhi’s jibe that it was a “suit boot ki Sarkar” (government of the rich and the corporates).44 Despite the fact that the Congress had been badly weakened in the 2014 polls, this taunt had political resonance, which was evident from the BJP’s losses in subsequent state assembly elections in Delhi (February 2015) and Bihar (November 2015).

The case of the land acquisition bill exemplifies an important distinction in the RSS-BJP relationship during the tenure of Vajpayee and Modi. During Vajpayee’s tenure, the BJP-RSS relationship was often acrimonious with disagreements spilling out onto the streets.45 The relationship has been much more cordial during Modi’s government, partly because of the implicit bargain that the BJP provides a forum for the RSS’s affiliates to provide feedback on government policies as a way to minimize a public airing of disagreements. The forums have often allowed RSS affiliates to shape BJP policy, as the case of pricing of GM seeds illustrates, even if their recommendations are not uniformly adopted or implemented.

Genetically Modified Seeds

The SJM has also had unheralded, albeit modest, success in pressuring the Modi government to temporarily seek to impose regulatory restrictions on GM seeds through price controls, although the government later opted to reverse course. This is significant because previously, when he served as chief minister of Gujarat, Modi was enthusiastic about GM technology. For a time, this viewpoint carried over into his tenure as prime minister, as Modi asserted that “India has the potential to become a major producer of transgenic rice and several genetically modified or engineered vegetables.”46

By contrast, the SJM has been a longtime crusader against GM crops and has even collaborated with ideological adversaries of the Sangh to lobby against regulatory approvals of GM seeds. Mahajan, the SJM’s co-convener and the organization’s public face, has questioned the “so-called science” behind GM foods, casting aspersions on both their efficacy and their safety.47 The SJM and the BKS joined Nuziveedu Seeds, an Indian agricultural inputs company, in opposing the pricing policies of Monsanto, the patent holder for GM cotton seeds.

Prabhakar Kelkar, the vice president of the BKS, remarked that it was “important for all of us to unite to wage a war against Monsanto . . . for [the] greater good.”48 The BKS lobbied Radha Mohan Singh, India’s union minister of agriculture and a longtime RSS member, to cap the royalty rates and in effect prevent Monsanto from selling GM seeds with the latest technology in India. Partly because of lobbying by RSS affiliates, the government imposed price caps on the royalty for GM cotton seeds, slashing the amount by around 70 percent, disregarding Monsanto’s threat to re-evaluate its business in India.49 Kelkar said the RSS pushed for Singh to act against Monsanto “because we all believe in the same agenda.”50

Only after the intervention of senior U.S. government officials did the Modi government suspend its decision to cap royalty rates for GM cotton seeds. Although the cap on Monsanto’s royalty rates was reversed, the Indian government’s decision to acquiesce to lobbying by RSS affiliates, even at the cost of sullying the government’s investor-friendly reputation, demonstrates that the RSS and its affiliates do hold real sway on economic and commercial policy matters, even when its preferences are not always enacted at the end of the day. It ultimately took the weight of U.S. government lobbying to get New Delhi to reverse course.

Demonetization and the Goods and Services Tax

In November 2016, Modi made the surprising decision to demonetize approximately 86 percent (by value) of all Indian currency.51 The demonetization campaign is widely regarded by many economists to have been a failure.52 In promoting the move, the government argued that the draconian measure would flush out black money, curb counterfeit currency, and significantly curtail the use of cash in the economy. Evidence to date suggests that the policy has largely failed to achieve these objectives.53 These arguments notwithstanding, the Sangh Parivar still largely supports it. While the provenance of the idea of demonetization remains murky, some commentators have posited that S. Gurumurthy, an RSS ideologue and co-convener of the SJM, had a role in advising Modi to implement this disruptive measure.54 Despite recognition of the hardships created by demonetization, especially among the small-scale traders who once constituted the core of the organization’s support base, the RSS believed the move was in the long-term interests of the economy.55 Gurumurthy himself has gone on record to say that demonetization saved the economy from “collapse”; the withdrawal of high-value currency notes helped to reduce asset prices that were fueling “fake growth.”56

Coming closely on the heels of demonetization, the introduction of the goods and services tax (GST) compounded the disruptions to the unorganized sector of the Indian economy’s supply chains. The GST unified the array of indirect taxes into a single unified value-added tax, a change that had the further benefit of increasing the efficiency of interstate commerce. Higher compliance costs for small family-run businesses aroused the ire of parts of the Sangh, with both the SJM and the BJS opposing provisions of the GST that they believed would put such family-run businesses at a competitive disadvantage.57

In formulating and rolling out the demonetization and GST policies, both the BJP government and the Sangh took pains to accommodate each other’s interests and concerns. The Sangh opted to support a policy that some of its affiliates had deep reservations about, while the BJP government conveyed its openness to addressing at least some of the Sangh’s concerns. Within a week of Bhagwat’s critical 2017 Vijayadashami speech, the central government reduced the GST on some common household items and lessened the GST compliance burden on small businesses.58 The government’s 2019 budget further eased GST compliance on small businesses by increasing the GST threshold.59 The Sangh Parivar’s (albeit reluctant) acquiescence to demonetization and the GST demonstrates not only its recent political pragmatism but also the degree to which its support base has expanded from small traders and North Indian trading communities.

Conclusion

Over the past year, the RSS has leveraged India’s changing political context to nudge the BJP government in a more economically populist direction, although these efforts have not been unambiguously successful. In many cases, government policy bears the RSS’s imprint, but these positions have not always been incorporated into the final drafts of legislation or fully implemented. Furthermore, this pattern of influence on economic thinking runs both ways: just as the RSS and Sangh affiliates have helped shape government policy, the BJP too has exerted influence on its Sangh colleagues. While the causal connections are messy—and circular—there is no doubt that the RSS has found a seat at the policy high table for the last five years.

A prominent recent instance of this pattern is the nomination of the SJM’s S. Gurumurthy as a director on the central board of the Reserve Bank of India (RBI).60 The RBI board has a limited role in policy decisions and has traditionally served as an advisory body. However, Gurumurthy lobbied the RBI to change regulations that he perceived were choking the flow of credit to small and medium enterprises.61

The SJM and other RSS economic affiliates have also supported the repatriation of RBI “excess reserves” to the government, resources that could presumably be used to fund populist welfare measures in the run-up to the 2019 election. The SJM noted in its newsletter that “only [the] central government owns the right over these reserves and profits of the RBI.”62 The ensuing controversy led RBI governor Urjit Patel to quit his position months before the end of his term, further damaging the government’s reformist credentials. Among the first decisions of the new governor, Shaktikanta Das, was to allow regulatory forbearance on the restructuring of the overdue loans of small and medium enterprises—a marked reversal of the previous RBI governor’s policy against the restructuring of loans.63

The Indian government has pursued more populist economic policies on other fronts as well. A month after Modi’s celebrated 2018 Davos speech, Union Finance Minister Arun Jaitley announced in his budget speech a “calibrated departure from the underling policy [of reducing customs duty of the] last two decades.”64 In response to the depreciation of the Indian rupee, caused largely by a bout of financial market volatility that has increased investors’ risk aversion toward emerging markets, the government further selectively increased import duties, ostensibly to reduce the trade deficit.65 This change in the government’s policy orientation undoubtedly pleased the statist and autarkic wing of the Sangh who blame trade liberalization for India’s recurrent trade deficit.66

More recently, the proposed tightening of norms—a policy that was met with approbation from the SJM—for e-commerce retailers, which hampers the operations of Amazon and Flipkart (a firm majority-owned by Walmart), flies in the face of the prime minister’s promise of a “red carpet” for foreign investors.67 The increased assertiveness of the Sangh Parivar also caused the government to abandon the prime minister’s campaign claim that “the government has no business being in business,” instantiated most recently by the scrapped plans to privatize perennially loss-making Air India.68

The BJP’s 2019 manifesto and campaign platform will likely center on an expansion of public spending and a deemphasis on business-friendly appeals.

Notwithstanding the Indian finance minister’s repeated commitments to fiscal prudence,69 and in the face of flagging revenues from the newly introduced GST,70 the Modi government has also proposed an expensive expansion of the welfare state. Ayushman Bharat (better known as Modicare) seeks to provide health insurance of 500,000 rupees (approximately $7,000 or more than three-and-a-half times India’s per capita GDP) to the poorest half of Indian citizens.71 Similarly, in a decision that reflects skepticism over the efficacy of farm loan waivers from quarters within the Sangh,72 the Modi government announced an income support scheme for farmers in the 2019 budget to ameliorate the sagging fortunes of the agriculture sector.73 To be sure, India’s dismal human development outcomes and the recent distress in the country’s agricultural sector make a strong case for greater public welfare spending. But this policy, too, is reflective of the change in the Modi government’s orientation that the last few months of its tenure are focused more on populist concerns.

Much to the chagrin of the party’s libertarian-minded supporters, the BJP’s 2019 manifesto and campaign platform will likely center on an expansion of public spending and a deemphasis on business-friendly appeals. The BJP’s 2014 campaign was centered on the promise to bring acche din (better days) to the Indian economy; the next campaign is poised to be more preoccupied with promises of expanding the welfare state and improving the efficacy of welfare delivery.

The RSS, for its part, appears content with the policy direction the Modi government has taken, and this shift could not have come at a better time: the RSS cadres are an important source of help for powering the BJP’s formidable election machine. A satisfied, energized cadre will provide a much-needed lift to the ruling party’s reelection prospects.

Gautam Mehta is a recent graduate of the Johns Hopkins School of Advanced International Studies (SAIS). He helped write a book on the Sangh Parivar, co-authored by Walter K. Andersen and Shridhar D. Damle, called The RSS: A View to the Inside (Penguin Random House India, 2018).

Notes

1 “India Now Most Open Economy in the World for FDI, Says Modi,” Hindustan Times, June 20, 2016, https://www.hindustantimes.com/business/india-now-most-open-economy-in-the-world-for-fdi-says-modi/story-wvUqymJYFUyhzRB6ib42uI.html.

2 “RSS Affiliate Objects Against FDI Easing,” Press Trust of India, November 16, 2015, https://www.livemint.com/Politics/zWpT0o9im7fhcDL5zlO7pI/RSS-affiliate-objects-against-FDI-easing.html.

3 Bharatiya Mazdoor Sangh, “Draft Resolution-1,” July 16, 2012, http://bms.org.in/encyc/2012/7/16/DRAFT-RESOLUTION--1.aspx.

4 Dilip Thakore, “Wanted: A Second Green Revolution,” Rediff.com, November 7, 1998, https://www.rediff.com/money/1998/nov/07dilip.htm.

5 Bharatiya Janata Party, Vision Document 2004, November 7, 2016, http://library.bjp.org/jspui/bitstream/123456789/244/1/BJP%20VISION%20DOCUMENT%202004.pdf.

6 The RSS’s affinity for cows, a revered animal in Hinduism that is regarded by some adherents as an abode of deities, informs parts of the organization’s economic philosophy. Stringent de jure and de facto curbs on the slaughter of cows means that the ownership of milch cattle is economically unviable for a vast majority of Indian farmers. Various RSS ideologues and affiliate institutions have promoted research on the impact of commercial endeavors, such as cow dung–based fertilizers, on the economic viability of barren cows (or those that no longer produce milk).

7 Dharmendra Kaushal, R.S.S. Resolves: 1950 to 2007 (New Delhi: Surichi Prakashan, 2007).

8 Ayush Nadimpalli, “Revival of Rashtriya Utsavs: The Antidote for Commercialization of Culture,” Vishwa Samvad Kendra Bharat, July 14, 2015, http://vskbharat.com/revival-of-rashtriya-utsavs-the-antidote-for-commercialization-of-culture/?lang=en.

9 Author interview with Ashwani Mahajan, New Delhi, January 13, 2018.

10 The SJM has argued that the opening up of retail trade to foreign investment in many developing countries has hurt small shopkeepers. See Swadeshi Jagran Manch, “Resolution-2: Ban Entry of Multinational Companies in Retail,” Tenth National Convention (Jalandhar-Punjab), October 2–4, 2010, https://www.swadeshionline.in/resolution-2.

11 Bharatiya Kisan Sangh, “Resolution: Don’t Legalise Food Colonialism and Slavery of Seed Sovereignty Through BRAI,” Prabandh Samiti Meeting at Parbhani, July 18, 2010, http://en.bharatiyakisansangh.org//Encyc/2012/7/4/Resolution-passed-in-Prabandh-Samiti-meeting-at-Parbhani-in-2010.aspx.

12 Ibid.

13 “Job of RSS Is to Unite Hindu Society and Make It Fearless, Says Bhagwat,” India Today, February 15, 2015, https://www.indiatoday.in/india/story/rss-mohan-bhagwat-unite-hindu-society-cannot-be-through-bhashans-240411-2015-02-15. For further details on the evolution of the RSS’s views on politics, see Walter K. Andersen and Shridhar D. Damle, The RSS: A View to the Inside (New York: Viking Books, 2018).

14 Rupam Jain Nair and Frank Jack Daniel, “Special Report: Battling for India's Soul, State by State,” Reuters, October 12, 2015, https://www.reuters.com/article/us-india-rss-specialreport/special-report-battling-for-indias-soul-state-by-state-idUSKCN0S700A20151013.

15 Rahul Kanwal, “RSS Views Now More Aligned with Modi’s? Mohan Bhagwat Says Sangh Not Opposed to FDI, Liberalization,” India Today, November 2, 2013, https://www.indiatoday.in/india/story/rss-mohan-bhagwat-narendra-modi-fdi-bjp-216245-2013-11-02.

16 “RSS Annual Report Submitted by Sarakaryavah Bhaiyyaji Joshi at ABPS Meet Nagpur,” Samvada.org, March 13, 2015, https://samvada.org/2015/news/rss-annual-report-abps-2015/.

17 Bajrang Lal Gupta, “Sumangalam: A New Development Paradigm,” Organizer, August 14, 2018, http://www.organiser.org//Encyc/2018/8/14/Sumangalam-A-New-Development-Paradigm.html.

18 Rashtriya Swayamsevak Sangh (RSS), “Summary of the Vijayadashami 2017 Address of Sarsanghchalak Dr. Mohan Ji Bhagwat,” September 30, 2017, http://rss.org/Encyc/2017/9/30/mohan-bhagwat-vijayadashami-speech-2017.html.

19 Gupta, “Sumangalam.”

20 Ratan Sharda, “Significance of Shri Mohan Bhagwat’s Speech at BSE,” Organizer, April 20, 2018, http://www.organiser.org/Encyc/2018/4/20/Mohan-Bhagwat-at-BSE.html.

21 “Founded by Dattopant Thengadi on July 23, 1955 BMS Observes Foundation Day Today,” Samvada.org, July 23, 2014, https://samvada.org/2014/news/founded-by-dattopant-thengadi-on-july-23-1955-bms-observes-foundation-day-today/.

22 “RSS Annual Report,” Samvada.org.

23 “In Pursuit of Virtuous Wealth,” Organizer, November 5, 2018, http://www.organiser.org//Encyc/2018/11/5/In-Pursuit-of-Virtuous-Wealth.html.

24 RSS, “Summary of the Vijayadashami 2017 Address of Sarsanghchalak Dr. Mohan Ji Bhagwat.”

25 RSS, “ABPS 2011: Need for a Decisive Blow Against Corruption,” 2011, http://www.archivesofrss.org/Resolutions.aspx.

26 Bharatiya Janata Party, Election Manifesto: Lok Sabha Election-1996, November 7, 2016, http://library.bjp.org/jspui/bitstream/123456789/244/1/BJP%20VISION%20DOCUMENT%202004.pdf.

27 The BJP’s 1999 election manifesto explicitly called for “a moratorium on contentious issues.” Bharatiya Janata Party, For a Proud, Prosperous India: An Agenda [Election Manifesto: Lok Sabha Election-1999], November 7, 2016, http://library.bjp.org/jspui/bitstream/123456789/242/1/BJP%20ELECTION%20MANIFESTO%201999.pdf.

28 “U.S. Imposes Sanctions on India,” CNN, May 13, 1998, http://edition.cnn.com/WORLD/asiapcf/9805/13/india.us/.

29 Bharatiya Janata Party, For a Proud, Prosperous India: An Agenda (1999).

30 Chris Ogden, “A Lasting Legacy: The BJP-Led National Democratic Alliance and India’s Politics,” Journal of Contemporary Asia 42, no. 1 (February 2012): 22–38, https://www.tandfonline.com/doi/abs/10.1080/00472336.2012.634639.

31 “Swadeshi Gives Way to the Reforms Juggernaut,” Hindu, May 27, 2001, https://www.thehindu.com/2001/05/27/stories/05271344.htm.

32 Shashank Chouhan, “Quote, Unquote Narendra Modi,” Reuters, July 12, 2013, http://blogs.reuters.com/india/2013/07/12/quote-unquote-narendra-modi/.

33 “Red Carpet, Not Red Tape,” NarendraModi.in, May 10, 2014, https://www.narendramodi.in/red-carpet-not-red-tape-3160.

34 Indian Ministry of Commerce Department for Promotion of Industry and Internal Trade, “Quarterly Fact Sheet: Fact Sheet on Foreign Direct Investment (FDI) From April, 2000 to June, 2018,” August, 23, 2018, https://dipp.gov.in/sites/default/files/FDI_FactSheet_23August2018.pdf.

35 For details, see Vaidyanathan Iyer, “Rajasthan Shows Way in Labour Reforms,” Indian Express, June 8, 2014, https://indianexpress.com/article/india/india-others/rajasthan-shows-way-in-labour-reforms/.

36 For details on the membership of the Sangh Parivar and its various affiliates, please see Andersen and Damle, The RSS: A View to the Inside.

37 For details on the failure to follow through on resettlement and habitation promises, see Amy Kazmin, “India: Land in Demand,” Financial Times, July 7, 2015, https://www.ft.com/content/2bba915c-18fa-11e5-a130-2e7db721f996.

38 Ordinances are executive orders that are promulgated by the president on the recommendation of the Union Cabinet when the parliament is not in session, thus allowing the executive to take immediate legislative action. However, ordinances expire if the parliament does not give them formal approval within six weeks of the next legislative session.

39 “Bharatiya Kisan Sangh Opposes Land Bill,” Pioneer, May 1, 2015, https://www.dailypioneer.com/2015/india/bharatiya-kisan-sangh-opposes-land-bill.html.

40 Vivek Deshpande, “Amid Protests Over Land Bill, Amit Shah Meets RSS Chief Mohan Bhagwat,” Indian Express, May 17, 2015, https://indianexpress.com/article/india/india-others/amid-protests-over-land-bill-amit-shah-meets-rss-chief-mohan-bhagwat/.

41 Ibid.

42 Ravish Tiwari, “Land Bill Gets a Bharatiya Kisan Boost: Dilutes Opposition to Social Impact Assessment and Consent Clause,” Economic Times, June 11, 2015, https://economictimes.indiatimes.com/news/politics-and-nation/land-bill-gets-a-bharatiya-kisan-sangh-boost-dilutes-opposition-to-social-impact-assessment-and-consent-clause/articleshow/47622127.cms; and Gyan Varma and Elizabeth Roche, “NDA Blinks, Paves Way for Land Law,” Livemint, August 4, 2015, https://www.livemint.com/Politics/JZ51wQDcB9Q0PBbLXexmTP/BJP-agrees-to-bring-back-key-provisions-in-land-acquisition.html.

43 Tiwari, “Land Bill Gets a Bharatiya Kisan Boost.”

44 “Modi Still a ‘Suit-Boot’ Person, Keeps Distance From Poor: Rahul,” Indian Express, January 31, 2018, https://indianexpress.com/article/north-east-india/modi-suit-boot-sarkar-rahul-gandhi-meghalaya-bjp-5046510/

45 See, for instance, Bhavdeep Kang, “Whiplash Effect,” Outlook, May 21, 2001, https://www.outlookindia.com/magazine/story/whiplash-effect/211711.

46 Somesh Jha, “Modi's ‘Make in India’ Bats for GM Food Crops,” Rediff.com, November 29, 2014, https://www.rediff.com/business/report/modis-make-in-india-bats-for-gm-food-crops/20141129.htm.

47 Swadeshi Jagran Manch, “‘Don’t Follow MNC-Promoted GM Crop Science Blindly,’” https://www.swadeshionline.in/content/%E2%80%98don%E2%80%99t-follow-mnc-promoted-gm-crop-science-blindly%E2%80%99.

48 Mayank Bhardwaj, Rupam Jain, and Tom Lasseter, “Seed Giant Monsanto Meets Its Match as Hindu Nationalists Assert Power in Modi’s India,” Reuters, March 28, 2017, https://www.reuters.com/investigates/special-report/monsanto-india/.

49 Ibid.

50 Ibid.

51 Justin Rowlatt, “Why India Wiped Out 86% of Its Cash Overnight,” BBC, November 14, 2016, https://www.bbc.com/news/world-asia-india-37974423.

52 Gabriel Chodorow-Reich et al., “Cash and the Economy: Evidence from India’s Demonetization” Working Paper, National Bureau of Economic Research, 2018, https://scholar.harvard.edu/files/crgmn_demonetization.pdf; and Sadanand Dhume, “India’s Demonetization Debacle,” Wall Street Journal, December 15, 2016, https://www.wsj.com/articles/indias-demonetization-debacle-1481851086.

53 Ipsita Chakravarty, “The Daily Fix: RBI’s Latest Report Is Clinching Evidence That Demonetisation Was a Failure,” Scroll.in, August 30, 2018, https://scroll.in/article/892428/the-daily-fix-rbis-latest-report-is-clinching-evidence-that-demonetisation-was-a-failure.

54 Paranjoy Guha Thakurta, “The Importance and Unimportance of S. Gurumurthy,” Wire, August 8, 2018, https://thewire.in/economy/gurumurthy-demonetisation-modi-swamy.

55 J. P. Yadav, “Sangh’s Arm Adds Job Jolt,” Telegraph, December 9, 2016, https://www.telegraphindia.com/india/sangh-s-arm-adds-job-jolt/cid/1485781.

56 “Modi’s Demonetisation Saved India’s Economy from Fake Growth, Collapse; RBI Part Time Director Gurumurthy Explains How,” Financial Express, November 8, 2018, https://www.financialexpress.com/economy/modis-demonetisation-saved-indias-economy-from-fake-growth-collapse-rbi-part-time-director-gurumurthy-explains-how/1376113/.

57 “Two RSS-Linked Groups Question Sections of GST,” Indian Express, June 29, 2017, https://indianexpress.com/article/india/two-rss-linked-groups-question-sections-of-gst-4726886/.

58 Gireesh Chandra Prasad and Asit Ranjan Mishra, “Govt reduces GST rates on 27 items, gives relief to small and medium businesses,” Hindustan Times, October 7, 2017, https://www.hindustantimes.com/business-news/govt-reduces-gst-rates-on-27-items-gives-relief-to-small-and-medium-businesses/story-rmMu2ezexN1aNcppQAJPaL.html.

59 “BMS Blames GST of Destroying Small and Medium Scale Industries,” IndiaGlitz.com, January 16, 2018, https://www.indiaglitz.com/bms-blames-gst-of-destroying-small-and-medium-scale-industries-tamil-news-205037.

60 Mahesh Langa, “Gurumurthy Appointed to the Board of RBI,” Hindu, August 8, 2018, https://www.thehindu.com/news/national/gurumurthy-appointed-to-the-board-of-rbi/article24629066.ece

61 Vrishti Beniwal and Anirban Nag, “An Accountant Stirs Debate as India Central Bank Board Meets,” Bloomberg, November 18, 2018, https://www.bloomberg.com/news/articles/2018-11-19/an-accountant-stirs-debate-as-india-s-central-bank-board-meets.

62 Ashwani Mahajan, “Who Owns RBI’s Profits?” Swadeshi Patrik, December 2018, https://www.swadeshionline.in/sites/default/files/Dec%2018%20(E).pdf.

63 Anup Roy, “RBI Allows One-Time Restructuring of MSME Loans of Up to Rs 25 Crore,” Business Standard, January 2, 2019, https://www.business-standard.com/article/finance/rbi-allows-one-time-restructuring-of-msme-loans-of-up-to-rs-25-crore-119010200026_1.html.

64 Arun Jaitley, “Budget 2018-2019,” New Delhi, February 1, 2018, https://www.indiabudget.gov.in/ub2018-19/bs/bs.pdf.

65 Remya Nair, “Govt Hikes Customs Duty on More Items to Rein in Current Account Deficit,” Livemint, October 12, 2018, https://www.livemint.com/Politics/w9yoK9cadSqVXHUEZdhDlO/Govt-hikes-customs-duty-on-more-items-to-rein-in-current-acc.html.

66 “An Opportunity to Protect Domestic Industry,” Swadeshi Patrika, October 2018, 5, https://www.swadeshionline.in/sites/default/files/SP-October%202018%20(E).pdf.

67 The proposed policy disallows affiliates of e-commerce retailers from selling on the retailers’ platforms. India does not allow e-commerce retailers to sell directly to consumers, but only to operate virtual platforms that act as intermediaries between buyers and sellers. For more information, see Vasudha Venugopal, “Swadeshi Jagran Manch Welcomes Curbs on ‘Predatory Behavior,’” Economic Times, December 28, 2018, https://economictimes.indiatimes.com/news/economy/policy/swadeshi-jagran-manch-welcomes-curbs-on-predatory-behaviour/articleshow/67280597.cms.

68 Kiran Stacey, “Aborted Air India Privatisation Symptomatic of Bigger Problems,” Financial Times, July 2, 2018, https://www.ft.com/content/0683a7e0-7b74-11e8-bc55-50daf11b720d.

69 Asit Ranjan Mishra and Gireesh Chandra Prasad, “Arun Jaitley Signals No Fiscal Profligacy in Pre-Election Year,” Livemint, September 15, 2018, https://www.livemint.com/Politics/Ql1JM3ySJtugPXy3ZMvSjL/Arun-Jaitley-signals-no-fiscal-profligacy-in-preelection-ye.html.

70 “Govt Staring at a Shortfall of Rs 500 Bn to Rs 1 Trn in GST Collection?” Business Standard, November 24, 2018, https://www.business-standard.com/article/economy-policy/govt-staring-at-a-shortfall-of-rs-500-bn-to-rs-1-trn-in-gst-collection-118112400138_1.html.

71 Rohan Abraham, “What is ‘Modicare’ and How Will It Affect You?,” Hindu, February 2, 2018, https://www.thehindu.com/business/budget/what-is-modicare-and-how-will-it-affect-you/article22635372.ece.

72 Eram Agha, “Loan Waivers Not Enough, Don’t Treat Farmers Like Minority Vote Bank: RSS-Backed Kisan Sangh,” News18, December 20, 2018, https://www.news18.com/news/india/announcing-farm-loan-waivers-not-enough-cant-work-like-minority-appeasement-farmer-leader-1978829.html.

73 Vrishti Beniwal and Pratik Parija, “Modi Plans Cash Handout for Indian Farmers Before Election,” Bloomberg, December 31, 2018, https://www.bloomberg.com/news/articles/2018-12-31/modi-is-said-to-plan-cash-handout-for-india-farmers-before-vote.