India Inc worried about rise of religious, social intolerance

Is India liberal, tolerant and democratic, or is it conservative, atavistic and authoritarian? Investors want to know

Key highlights:

• It takes a long time to build a brand, but just one dissonant message to kill its appeal.
• The conversation today in academic circles, corporate boards and urban drawing rooms is not about India’s economic performance. It is about the rise of religious and social intolerance.
• Investors are once again raising questions about Brand India.
• Is India liberal, tolerant and democratic, or is it conservative, atavistic and authoritarian?
• India has moved up slightly in the rank order of ease of doing business index, but red tape still rules rampant
• Investors do not invest on the basis of a comparison between the past and the present. They do so on the basis of future potential.
• The Prime Minister’s silence has surfaced disquiet about not only the ideology of the government but also its effectiveness in implementation.

We must not kid ourselves. “Brand India” has taken a knocking these past few weeks. The lynching in Dadri received fulsome international coverage; Sudheendra Kulkarni’s ink-blackened face was seen by readers across the globe; the murder of Dalit children by an upper-caste mob has dominated social media. The conversation today in academic circles, corporate boards and urban drawing rooms is not about India’s economic performance. It is about the rise of religious and social intolerance.

Those who make the case that these incidents are the discrete actions of fringe and extremist groups and not reflective of a broader undercurrent are pulling wool over their eyes. They are missing an essential point. It takes a long time to build a brand, but just one dissonant message to kill its appeal.

Branding must not be confused with advertising. The two are no doubt linked. The success of one depends on the strength of the other. But they embody different concepts. Advertising is about hawking a product. It is about tangible attributes like technology, quality, price, performance and service. Branding, on the other hand, has an intangible resonance. It is about values, lifestyle and experience. Marketing success depends on fusing the two. A good product will have a short shelf life if not supported by a solid brand.

I recollect that a decade or so ago, our political leadership and the mandarins of Indian industry took over the Swiss resort village of Davos for the week of the World Economic Forum (WEF) gathering. India was “everywhere”. There were posters in conference halls, street corners, restaurants and hotels extolling India’s rich history, culture and cuisine. There were seminars and conferences on India’s economic dynamism.

The advertorial caption was “India shining”. The purpose of the effort was to “sell” the India story. It was to persuade the world to see India not simply as a location for IT and IT-enabled services, but also as a potential hub for competitive manufacturing. It was to draw attention to its youthful demographic profile in contrast to the greying of the rest of the world. And it was to reinforce the government’s commitment to an open, liberal and friendly investment environment.

There were many who felt that this effort was premature. They argued that India was bedevilled by inefficiencies and red tape; that corruption was pervasive and the infrastructure inadequate. And, most important, that populist politics still trumped responsible economics. As it happened, their concerns were overblown.

The response to “India shining” was strong. Our leaders were feted and India was talked about in the same breath as China. There were many reasons for this success, but one major factor was the positive perception of Brand India. Potential investors saw it as embodying institutional stability, the rule of law, transparency and fair play. They saw it as standing in healthy contrast to the opacity of China’s centralised system.

I am reminded of that week because it brings into relief the importance of the brand. The effort would not have been a success if people had a different perception of Brand India. I am also reminded of that week because, in the years following it, investor interest declined, even though India continued to rack up high economic growth rates. The reason, in large part, was the weakening of the brand edifice on which “India shining” had been built. The various corruption scandals and the arbitrariness of retroactive taxation led to a loss of investor confidence in the composite of the values, concepts and ideas that were perceived to underpin Brand India.

Prime minister Narendra Modi did much to recover lost ground following his election last May. His speeches at various forums did ease concern that he might pander only to the sentiments of the majority and forsake the needs of the minority. “Sabka saath, sabka vikas” was a reassuring slogan. His focus on development, his commitment to improving the ease of doing business, his assurance that “tax terrorism” was a thing of the past, and his practical, friendly and liberal overtures to, in particular, the Indian diaspora on his trips overseas, did suggest that the UPA experience was an aberrant interregnum and that the fundamentals of Brand India were still solid.

All of these positives have now got diluted. Investors are once again raising questions about Brand India. Is it indeed liberal, tolerant and democratic, or is it conservative, atavistic and authoritarian? If it is the former, then why has the prime minister not come out in unequivocal condemnation of the atrocities? Why has he not reassured the public accordingly? Why has he allowed his Cabinet colleagues to deepen the doubts through irresponsible comments?

The prime minister cannot escape the reality of today’s politics. He fought and won a “presidential” election. He is not the first amongst equals in the Cabinet. He is the unchallenged supremo. He is expected, therefore, to give expression to the values of Brand India. His silence has surfaced disquiet about not only the ideology of the government but also its effectiveness in implementation. The GST has, for instance, been diluted; the land reform bill dropped; and whilst India has moved up slightly in the rank order of the ease of doing business index, red tape has certainly not been replaced by the red carpet.

“India shining” was easy to package and sell. For the product had solid tangible and intangible attributes. In time, however, “India shining” got discredited because of the weakening of the intangibles. “Achhe din” struck a chord because it, too, was seen to contain a similar composite of attributes. It will suffer a similar fate if current apprehensions are not removed. Investors do not invest on the basis of a comparison between the past and the present. They do so on the basis of future potential. The argument that India has confronted many incidents of religious and social intolerance in the past carries no weight. What carries weight is the perception that India’s future will be grounded on values of liberalism, equality, tolerance and inclusion.

This article first appeared in The Financial Express on November 02, 2015. Like other products of the Brookings Institution India Center, this is intended to contribute to discussion and stimulate debate on important issues. The views are those of the author.