By Girish Linganna
It is widely recognized that India is experiencing rapid economic growth, currently ranking as the world's fifth-largest economy. In addition, India's stock market has seen significant growth, making it the fourth-largest globally. The country is led by Prime Minister Narendra Modi, who is considered one of the most influential leaders in recent times. While Modi's focus includes economic development, his agenda also encompasses a populist Hindu-first ideology, which at times can border on chauvinism or extreme Nationalism and authoritarianism. However, what is not widely known is that these conflicting forces of development and identity politics are contributing to a noticeable divide between the northern and southern regions of India.
The prosperous southern region of India is where one can witness the emergence of a modern and technologically advanced India, characterized by vibrant startups, renowned educational institutions, and state-of-the-art iPhone assembly facilities. However, interestingly, Prime Minister Modi's party does not receive significant support from this region. Instead, it relies more on the economically disadvantaged and densely populated rural areas of the northern region, where Hindi is the predominant language. This division between the north and south will play a crucial role in the upcoming elections in April and May, where Modi is expected to secure a third term as Prime Minister. The way this divide is handled in the long run holds immense significance for India's future. In a concerning scenario, it could lead to a constitutional crisis and disrupt India's unified market. On the other hand, if managed effectively, it has the potential to mitigate the harshness of India's identity politics and foster a more harmonious future.
Geographical divisions have a significant impact on the development of nations. For instance, in the United States, the politics and economy are still influenced by the consequences of the civil war. Similarly, when Deng Xiaoping aimed to introduce economic reforms in China in 1980's, he embarked on a “southern tour” to Guangdong province. By endorsing its entrepreneurial spirit and historical openness, Deng Xiaoping countered opposition from conservative members of the Communist Party and paved the way for the economic boom that propelled China into becoming an economic superpower.
To understand the division within India, we must start with the economic aspect. Historically, the southern region of India has been wealthier and more urbanized. Among India's 28 states, the southern states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Telangana, with only 20% of the population, account for 30% of loans and have attracted 35% of foreign investment in the past three years. This economic outperformance can be attributed to factors such as effective governance, quality education, and strong property rights, which have facilitated entrepreneurship and the development of a sophisticated financial system. The economic gap between the north and south has widened since India gained independence in 1947. In 1993, the south contributed 24% to India's GDP, whereas the latest figure stands at 31%.
When foreign executives visit India, they still acknowledge the national government in Delhi, but the most exciting business prospects often lie in the southern region. This is evident in the shift of global supply chains from China to India, where 46% of the country's electronics exports originate from the south. In India's renowned startup ecosystem, 46% of the highly valued tech companies known as “unicorns” come from the south, particularly from Bangalore. Furthermore, the five southern states account for 66% of the IT services industry's exports. Currently, there is a growing trend of establishing “global capability centres,” where multinational corporations bring together their global auditors, lawyers, designers, architects, and other professionals. Remarkably, 79% of these centres are located in the southern region of India.
While the southern region of India plays a vital role as the country's economic powerhouse, its political landscape differs significantly from that of the north. In the northern states, the focus is primarily on promoting the Hindi language, fostering a strong Hindu identity, and sometimes engaging in the demonization of Muslims. The Bharatiya Janata Party (BJP), led by Prime Minister Modi, actively supports these elements alongside their emphasis on national development. This approach is driven by both ideological passion and the party's electoral strategy.
The BJP's strategy is less effective in the southern region of India. Historically, voters in the south have supported regional parties that prioritize local languages like Tamil and English, and advocate for more moderate Hindu values. In the 2019 elections, only a small percentage of the BJP's voters and parliamentary seats came from the south. In Karnataka, the BJP's stronghold in the south, they lost control of the state legislature in the 2023 elections. Despite Prime Minister Modi's vision of a technologically advanced central government that unifies the entire country, he still lacks a strong mandate from the southern states.
Certainly, the increase in inter-state trade from 23% of GDP in 2017 to 35% in 2021 is a significant development. This growth in trade demonstrates the importance of fostering a strong national single market in India. It allows businesses to expand their operations and benefit from economies of scale, leading to increased productivity and economic efficiency. This upward trend reinforces the need to address geographical tensions and promote further integration within the country to unlock its full economic potential.
The implementation of necessary reforms in India, including education and energy, requires collaboration between the central government and the states, as stipulated in the country's constitution. Deepening reforms in the education sector, for example, necessitates joint efforts to address the challenges faced by young Indians in regions with limited job opportunities, enabling them to move to more economically vibrant areas such as the south in search of employment. Similarly, to power the economy while reducing emissions, India requires the establishment of a comprehensive national energy market. In essence, these reforms require cooperative action between the central government and the states to achieve nationwide progress.
Skeptics have concerns that if Prime Minister Modi is re-elected, it may disrupt the constitutional equilibrium. Leaders from the southern region already accuse him of unfairly targeting them through baseless corruption investigations, withholding central government funds, and imposing an unjust level of taxation to subsidize the northern states. Additionally, there is apprehension that the south may face disadvantages in 2026 when parliamentary constituency boundaries are redrawn. Against the wishes of the southern states, the BJP might attempt to enforce Hindi as the national language.
In the coming years, such confrontations have the potential to hinder crucial economic reforms in India. In the most extreme case, it could even spark discussions of secession, a topic that last emerged after India gained independence and was subsequently prohibited through a ban in 1963 on any politician advocating for it.
Fortunately, India and Prime Minister Modi have a more promising alternative. To gain competitiveness in the south, the BJP could adopt a more moderate stance on its Hindutva message, limit its emphasis on Hindi promotion, prioritize economic development, and promote successors who are more moderate than the current group of hardliners surrounding Mr. Modi. While it is still early days, our recent reporting from within the BJP's southern leadership suggests that some of these shifts may be underway. The southern region of India already offers a glimpse of the future for the country's economy. If Prime Minister Modi and his party make wise choices, the south could also serve as a preview of the future of Indian politics.
(IPA Service)
(The author is a Defence, Aerospace & Political Analyst based in Bengaluru.)
