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Children play in the streets of a resettlement community for survivors of anti-Muslim violence that tore through Gujarat in 2002 on the outskirts of Ahmedabad, the state’s largest city. (IAIN MARLOW/THE GLOBE AND MAIL)
Children play in the streets of a resettlement community for survivors of anti-Muslim violence that tore through Gujarat in 2002 on the outskirts of Ahmedabad, the state’s largest city. (IAIN MARLOW/THE GLOBE AND MAIL)

Subcontinent stagnation: How India botched its economic miracle Add to ...

Ajay Goenka, the chairman of Rainbow Papers Ltd., a large paper company listed on the Bombay Stock Exchange, has met Mr. Modi many times. He once lobbied the chief minister to change Gujarat state government procurement restrictions that prohibited departments and agencies from buying local, Gujarat-made paper. Mr. Goenka received a letter that evening informing him that it was done. In a country where approvals can take months, or hefty bribes, this was remarkable. “In other states, it would have cost us time and money both,” Mr. Goenka says, noting that local businesses regularly bribed officials before Mr. Modi took office.

Among Indian business people, Mr. Modi is revered with a fervour bordering worship. Mr. Goenka, who once gave Mr. Modi a copy of a Ripley’s Believe it or Not book as a gift and received a signed thank you note in return, recalls a telling meeting. Mr. Goenka says: “One industrialist just said ‘I want to touch him.’ ”

Divisive leadership

Mr. Modi, of course, is also well known for his polarizing politics, stoking Hindu-Muslim tensions and leaning heavily on a record of economic development that many critics think is burnished and distorted. He has become broadly popular because of the state of the national economy, but the situation in his home state – partly because of his own reliance on his track record – has haunted him during the campaign.

In 2002, anti-Muslim violence flared across his state, leaving more than 1,000 people dead – most of them Muslims. Many police officers did nothing. And some in Mr. Modi’s administration were implicated. Since the violence, human rights groups have had to fight Mr. Modi’s regime for compensation and housing, since many buildings and mosques were torched. At one point, Mr. Modi referred to the Muslim resettlement communities in Gujarat as “baby-making factories,” but as he has run nationally, he has toned down that sort of rhetoric – although one of Mr. Modi’s close confidantes was recently warned by the Election Commission of India after exhorting Hindus to get “revenge” against Muslims by voting for the BJP.

For these reasons, many see Mr. Modi – who rose through a hard-line, Hindu nationalist organization – as an unfit leader for such a diverse country. Nandan Nilekani, the billionaire foudner of Infosys and a candidate for the rival Congress party in tech-centric Bangalore, says Mr. Modi is a divisive, dictatorial leader.

“I think running India is very different from running a state,” Mr. Nilekani says in an interview. “Running India is managing the complexity of different parts of the country. Different religions. Different language groups. Different castes. Different ethnic groups. It requires a very broadminded and very consensus-oriented leader.”

But Mr. Modi’s rise on economic credentials have led to a critical re-examination of his state’s development. Despite strong growth and the opening of facilities from firms such as McCain and Bombardier, Gujarat still trails other states such as Tamil Nadu in terms of both economic growth and foreign direct investment.

The state has also regressed on some social metrics during Mr. Modi’s time in office: Malnutrition remains high, the state’s literacy ranking has fallen, the ratio that measures female infanticide has gotten worse, and the percentage of state funds spent on health has declined.

Gujarat has not been immune to India’s tragic, debt-prompted farmer suicides. Critics view Mr. Modi’s wooing of investment with incentives and land allotments as unsustainable giveaways that do not generate well-paying jobs for the masses. Indian liberals and many academics see Mr. Modi’s economic track record as a sham – and his success perplexes and frustrates them.

Still, Gujarat remains one of India’s top-performing states, at a time when the national economy is faltering. And although Mr. Modi and his party are not immune to putting politics before free markets – on issues such as foreign investment in the retail sector – polls suggest that Indians see him and the BJP as the ones to fix the current economic mess. But if he does come into power, fixes – if coalition politics allow them – won’t be instant.

Reverting to his car analogy, Mr. Pathak says India’s business class is not expecting too much. “He’ll put the car back in first gear,” he says. “Then second. That’s more than enough for us. We don’t expect miracles.”

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