India’s G-7: Local Leaders with Global Interests

For a quarter century, the G-7 ruled the planet. From the mid-1970s to the late 1990s, leaders of the world’s seven top democracies would meet once a year to manage global affairs. They calibrated exchange rates, printed money, provided more development aid, imposed sanctions against outlaw nations, and issued political declarations. They even effectively went to war in Kosovo. The group eventually added Russia, and morphed into the G8. Then China, India and ten other countries were brought in to form the G20. But for years the G-7 was a compact, select, and like-minded body of advanced market democracies that led the pack.

India has a G-7. And to a large degree, those states rule this country. India’s seven biggest states have about 736 million people — just shy of the G-7’s current 746 million. At current population growth rates, those seven states will likely surpass the original G-7 in the next 3 or 4 years. The seven largest economies in India (a slightly different group than the seven largest populations) make up over 50% of India’s GDP — about $800 billion USD. At expected growth rates (between 7% and 9% per year), they will lead India past most of the traditional G-7 nations.

What are the seven most important states in India?  And who are their leaders?  This is an admittedly arbitrary exercise. But it is also instructive. My choice would combine population, economic size, and economic productivity. Population is critical, since influence in Delhi depends on how many parliamentary votes one controls — or one could control. But economic productivity also matters — overall GDP, as well as GDP per capita and the rate at which economies are growing.  To that end:

Each of the seven chief ministers listed above is a major force in India. Open any newspaper or magazine on a given day here— in any city — and you are likely to see at least three of them, and sometimes as many as five. Unlike the G-7, they never meet as a distinct group. But, as the saying goes, what happens in Bihar doesn’t stay in Bihar. Politics in each of these places has real national and international impact.It is easy to cluster them into three categories.

First is “old India”— embodied in the poorer states of the “Hindi-belt” in rural North India. Here, politicians aim to out-deliver for the poor. Kumari Mayawati, from massive 200 million-strong Uttar Pradesh, aspires to be the voice of the most downtrodden. Next door, in the even poorer, caste-divided, land-locked state of Bihar, Nitish Kumar has made it hip to be square. He has brought a nerd-like focus to social and economic performance.

Second are the newly emerging industrial engines of India, where GDP matters. Narendra Modi, from mid-sized Gujarat (a mere 60 million people), leads the pack. Modi combines machine-like efficiency with charismatic (and many say destructive and divisive) nationalism. In sharp contrast is J Jayalalitha from Tamil Nadu— the South Indian film-star turned FDI queen, who spends considerable time courting multinationals to build cars and cell phones on the outskirts of Chennai. And technocratic Prithviraj Chavan has just taken over Maharashtra —the manufacturing and financial capital of the country.

Finally, straddling these extremes are states such as Andra Pradesh and West Bengal – each of which is bigger than Germany but as poor, per capita, as Nicaragua. Chief ministers in these states have learned the hard way that the rural poor may not be ready for a full-speed-ahead embrace of globalization. Globally-focused cities such as Hyderabad and Kolkata have prospered in recent years, but politicians have not necessarily benefited. Over two-thirds of the people in these states still live in the countryside, and they have made their voices heard when they’ve felt ignored.

How chief ministers balance local and global forces has a real effect on national politics. Chief ministers have significant influence over the members of parliament from their party who are sent to Delhi. And many of them secretly or openly aspire to be prime minister some day.

If a chief minister such as Mayawati is in a coalition with the governing party in Delhi, she can use her block of parliamentarians to extract promises or resources from the governing coalition. That includes messing with complex international decisions such as the rules on foreign investment.

If a chief minister, such as Modi, is from a party that is out of power in Delhi, his efforts at the state level can contrast with or even undermine efforts of the central government. That can include bucking national bureaucrats in attracting foreign investment or damming rivers, or regulating power. It also can mean condoning anti-Muslim sentiment that complicates India’s tense relations with Pakistan.

Some are “managers.” Some are “mission-driven.” Some are “populists.” Three of these seven chief ministers are women — each of whom found a different path to power in a male-dominated country. In contrast to the Delhi-based managers who have run the country for sixty-five years, the new breed brings a feel for local politics. But they also have distinct views of the international economy will transform India — for better or worse.

Over the next several blog posts, I will try to sketch who these people are, how they see the world, and where they are taking India.

Sources:

Population and rural/urban population totals: Government of India, Ministry of Home Affairs, Office of the Registrar, Provisional Population Totals 2011, http://censusindia.gov.in/2011-prov-results/paper2/prov_results_paper2_india.html

GDP for states and per capital GDP: Unidow, VMW Analytic Services, Economy of the Federal States For Year 2011 & Population for Year 2011. These figures are in nominal GDP, as opposed to Purchasing Power Parity, which would probably be considerably higher.

Growth rates for states: State Planning Commission of India, Per Capita Net State Domestic Product at Constant (1999-2000) Prices (as on 25-10-2011), http://planningcommission.nic.in/data/datatable/0211/data%20100.pdf