In the recent state elections in India, the ruling BJP-led coalition government won resounding victories in some key states previously held by opposition parties. In the highly populated West Bengal, Mamata Banerjee, India’s most powerful female politician, who had been in power for 15 years, saw her Trinamool Congress party (TMC) trounced by the BJP (she has refused to accept the result). And in the small southern state of Kerala, the pro-business Congress party ousted the ruling left wing alliance in a landslide victory, with the BJP also gaining on foothold in the state for the first time ever. The BJP now controls 21 of the 28 states in India.
In the 2024 general election Prime Minister Narendra Modi, the leader of the Hindu nationalist Bharatiya Janata Party (BJP) retained power. The BJP was formed by members of what was basically a Hindu religious fascist party, the Rashtriya Swayamsevak Sangh (RSS), an organisation modelled on Mussolini’s Black Brigades. Modi was a long-time member of the RSS who then moved seamlessly into the BJP.
After winning power in 2014, Modi has increasingly cemented his control of government. The nationalist BJP is now seen as ‘business-friendly’, but it is still dedicated to turning a multi-ethnic and multi-religious India into a Hindu state, where minorities, particularly Muslims, would be reduced to second-class citizens. With increasing confidence, the Modi government has suppressed any public dissent by liberal democrats and socialists against this trend. Many opposition politicians have been imprisoned for lengthy periods on trumped-up charges and prevented from participating in elections and in public debate.
So how is it possible for the BJP and Modi to be so popular? First, because of the bulk of the BJP’s political support comes from the rural and more backward areas of this huge country who have not benefited from the strident rise of Indian capitalism in the cities. These areas are bulwarks of Hindu nationalism, incentivised by fear of muslims.
The second reason is the total failure over decades of the main capitalist party and standard bearer of Indian independence, the Congress party, to deliver better living standards and conditions for the hundreds of millions, not only in the country but in the city slums. Congress appears to millions as the party of the establishment controlled by a family dynasty (the Gandhis), while the BJP appears to many as the populist party of the forgotten people.
Now even the leftist government in a small state of Kerala in the south-west of India and predominantly Christian, not Hindu or Muslim, has fallen. Kerala is constantly promoted among the international left as a success story for public investment and support for the poor over the rich. The reality is less sanguine. The Left Democratic Front government appears to have lost touch with working people. Take these examples from one source.
For 266 days, ASHA workers of the public-health system that the LDF boasts about at international forums went on strike for a wage ₹21,000 a month; they were only drawing ₹7,000. After 10 months of protest, the government raised it to ₹8,000. The leftist government claimed that the strike was just a Congress conspiracy.
The 2021 manifesto of the leftist government had promised a minimum support price of ₹250 per kilogram but it was no higher than ₹200 in 2025. Farmers in the rubber belt complained that they could not survive and their children were being forced to migrate to the Gulf and elsewhere. Youth unemployment has reached 30% and among young women, 47%, nearly three times the national average. The government promised 20 lakh jobs in five years, but none had materialised.
Worse, corruption emerged. Around ₹2.7 crore ($300k) was paid by a mining firm to the Chief Minister’s daughter’s IT company between 2017 and 2020 for no demonstrable services. In the election campaign, the leftist alliance dropped its secular approach and tried to woo Hindu nationalists. As one source put it: “Kerala in 1957 voted Communist because the Left spoke for the labourer, the tenant, the Dalit, the fisherman, the woman in the kitchen and the field. Kerala in 2026 it began speaking only for itself.”
The ‘Communist’ left and Congress have failed to offer a clear alterntive to the BJP, which continues to boast of the unending success of the Indian economy since Modi came to power. The Indian media and Western economists laud the strong economic growth that India is apparently enjoying under the Modi government.
So ecstatic are mainstream economists about the success of Indian capitalism under Modi that talk of his neo-fascist past and current repressive measures are ignored. Instead, all the talk is of India ‘catching up’ with China and even surpassing its real GDP soon. For example, Goldman Sachs projects India will have the world’s second-largest economy by 2075. Modi made the economy a major part of his election pitch, pledging to lift the country’s economy “to the top position in the world”. This is nonsense, as I have shown elsewhere. It is true that the world’s second largest country by population has had very fast economic growth, averaging 5-6% a year (in fact a little slower in the 2020s), although the official figures can be questioned.
Source: IMF, author
Also according to official figures, poverty in India has declined substantially in both rural and urban areas. Based on the official poverty line, rural poverty fell from 64.9 percent in 2011-12 to 19.3 percent in 2023-24, while urban poverty declined from 39.7 percent to 8.6 percent. A similar pattern is observed for ‘extreme poverty’, which declined from 30.7 to 3.1 percent in rural areas and from 17.4 percent to 1.4 percent in urban areas over the same period.
But these estimates are again to be questioned. Labour market data suggest a much higher inequality in earnings with the top 10% of Indian earners getting income 17 times higher than the bottom 10%. Indeed, India’s economic growth post pandemic has been uneven, or “K-shaped” (where the rich have thrived, while the poor continue to struggle). India may be the fifth largest global economy at an aggregate GDP level, but on an income per person basis, it still languishes at the 140th rank. Inequality has widened to a hundred-year high according to research from the World Inequality Database! The top 10% of the Indian population now holds 77% of the total national wealth. The rise in inequality has been particularly pronounced since the BJP came to power in 2014. By 2022-23, top 1% income and wealth shares (22.6% and 40.1%) reached their highest historical levels and India’s top 1% income share is now among the very highest in the world.
In contrast, many ordinary Indians are not able to access the health care they need. 63 million of them are pushed into poverty because of healthcare costs every year – almost two people every second. Indeed, it would take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment company earns in a year. While the country is a top destination for ‘medical tourism’, the poorest Indian states have infant mortality rates higher than those in sub-Saharan Africa. India accounts for 17% of global maternal deaths and 21% of deaths among children below five years.
Rural distress, stagnation and falling farming incomes have led to a number of protests by farmers. According to Samyukta Kisan Morcha, an umbrella of farm unions, over 100,000 farmers have committed suicide in the last ten years of Modi’s rule. India ranks 111th of the 125 nations in the Global Hunger Index (2023) report. India is home to over a third of the world’s malnourished children, which is not only a health crisis but has a wider impact on the economy. A 2023 joint report by FAO, UNICEF, WHO and WFP, found that 74% of the population cannot afford healthy food.
The key for Indian capitalism (as it is for all capitals) is the profitability of its business sector. The profitability of Indian capital took a huge plunge in the 1970s, as profitability did globally. Under successive Congress-led governments, neo-liberal policies were adopted to drive up profitability. Then came the Great Recession and the ensuing Long Depression and profitability and growth began to fall back. Modi came to power as a result. Under Modi, Indian capital has sustained a relatively high rate of profit, enabling it to expand investment and the economy.
Source: Penn World Tables 11.0 series
Investment to GDP reached 42% at the peak of the credit boom of 2007. However, after the Great Recession of 2008-9 and the ensuing Long Depression of the 2010s, investment to GDP fell back significantly, until the Modi regime steadied the ship for Indian capital after the COVID pandemic slump.
Source: IMF
The Modi government is being encouraged by the international economic institutions to keep up the incentives to Indian capital. In its latest report, the World Bank said: “Boosting private sector-led growth will be critical to strengthening economic resilience and supporting more young people to enter the workforce, A predictable, business-enabling environment will help to unlock investment and create jobs at scale in priority sectors like energy and infrastructure, manufacturing, tourism, healthcare, and agribusiness.”
But India’s economic future is uncertain. “India is not immune to these global shifts. Intricately connected to global value chains, India faces external shocks and acute effects from these global policy changes, including tariff escalations and volatile capital flows.” India imports nearly 90% of its crude oil and 50% of its natural gas requirements. Conflicts in the Middle East, such as the disruption in the Strait of Hormuz, pose a severe risk to this energy supply, potentially creating high inflation and hindering economic activity. If oil prices stay elevated for an extended period, it could significantly impact India’s external balance and increase the government’s subsidy burden. Industrial activity in early 2026 has been a mixed bag, with manufacturing and mining showing resilience while electricity generation acts as a drag.
So the Indian economy remains vulnerable to global economic crises, particularly due to high energy import dependence and geopolitical disruptions. External headwinds like Middle East conflicts and global supply chain disruptions threaten momentum. If there is a global economic slump, India will join it.
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