In the race with its tricky neighbour, India has recently been winning

“WE USED TO make fun of Indians,” recalls Deepak Perwani with a wistful grin. “They had no concept of a deodorant; they wore polyester!” Fashionably stubbled and sporting a crisp white shirt and jeans, the Pakistani designer gestures towards the racks of sumptuous dresses in his Karachi showroom to make his point. Then he frowns. “We had big cars and Coke and Pepsi when they just had Limca and Thums Up; but India was self-reliant, and in the end they were right.”

Mr Perwani is proud of his country, even if it has often treated people of his Hindu faith badly. But like many Pakistanis he is keenly aware that the dowdy, ambling giant next door now moves at a far brisker pace. For the first half of their 70-year sibling rivalry it was Pakistan that made the bigger strides. Perhaps because it had less in the way of industry or infrastructure to start with, it was more energetic in building them up. But in all but two of the past 25 years India’s GDP has grown faster; a decade ago it surpassed Pakistan’s on a per-head basis, and the gap has relentlessly widened.

Indians are justly pleased with their progress, though they tend not to compare themselves with Pakistan but instead, aspirationally, with China. Yet most economists would contest Mr Perwani’s judgment. India’s post-independence self-reliance model may have brought pride but not prosperity. That began to arrive only when the old model, the “Licence Raj” of state planning and a closed economy, tipped India into financial crisis in the late 1980s. Since then successive governments have chipped away layers of rules that had “protected”, but also stifled, India’s economy.

There is no doubting India’s dynamism today. For example, in the early 1990s it made fewer than 2m motorbikes a year. Now it is the world’s biggest producer, making 20m new two-wheelers a year, 18m for domestic consumption and 2m for export. Domestic air traffic has doubled in the past decade. In 2016 the number of passengers grew by 23%, prompting Indian airlines to order more than 1,000 new aircraft. India’s software and services exports have nearly quadrupled over the past ten years, to $117bn a year. And in February ISRO, the national space agency, lifted a record 104 satellites into orbit in a single launch, using an Indian-made rocket.

In May 2014 the BJP won a landslide election victory with promises of a smaller, cleaner and more effective state. The new government trumpeted programmes to supercharge foreign investment, support industry and deliver better services. Corporate India lapped it up. In a country inured to the convention that India’s economy “grows at night while the government sleeps”, in the words of the writer Gurcharan Das, a strong, active, right-wing government seemed just what was needed.

But where’s the beef?

Three years later Mr Modi remains electorally invincible. The political opposition has been scattered to India’s provinces as the BJP’s electoral juggernaut has rumbled from victory to victory in the populous centre. The government remains relentless in its self-promotion. In terms of economic performance, however, it looks as patchy as its predecessors. At the higher levels there is less corruption, critics concede, and some long-awaited laws have finally passed. But there have been few big, bold moves for reform, such as privatising the state-owned institutions that control 70% of banking (and have piled up colossal portfolios of rotten loans). A much-touted goods and services tax (GST) rolled out this month usefully replaces a welter of central and state duties with a unified national tax, and should raise extra revenue. But the government’s mandarins went for an overcomplicated structure that will tax, for instance, different sweets and snacks at different rates: 5% for rosogolla and gulab jamun, 12% for both plain and stuffed kachori, 18% for sweets containing saffron or having a silver coating, and 28% for anything chocolate-covered. Australia, with a far more orderly economy, imposes a flat 10% GST.

When Mr Modi’s government has been bold, it has often charged in the wrong direction. Even government supporters now admit that its snap decision, in November 2016, to attack “black money” by scrapping the 86% of currency held in higher-value notes was a costly flop. A promise to waive farmers’ debts helped the BJP to an electoral victory in India’s most populous state, Uttar Pradesh, in March. But this generosity has inevitably encouraged farmers everywhere to demand the same, which by some estimates could cost some $40bn.

In yet another sudden decision, Mr Modi’s government in May decreed what amounted to a ban on livestock markets. This was explained as a humane intervention to prevent cruelty to animals, but was widely seen as a sop to the BJP’s conservative north Indian Hindu base, which abhors the slaughter of cows. This cast a shadow over India’s largely Muslim-run and highly successful $4bn buffalo-meat-export business. And the government did not seem to have considered the impact on the 2.5m people working in related trades, from leather shoes to cricket balls. (However, in mid-July India’s supreme court ordered a three-month stay on the market ban.)

All this has accelerated a slide in domestic investment, especially in manufacturing. This does not mean that India’s economy is in serious trouble; its scale and diversity, its human capital and its momentum all point to stronger growth in the medium term. What worries India’s chattering classes more is Mr Modi’s apparent inclination, in advance of the next national election in 2019, to pander to his party’s nationalist, conservative Hindu base rather than to India’s merchant classes. “He has lost interest in reform,” laments a Delhi businessman who voted for the BJP in 2014. “His constituency is too broad, and he’s decided that populism is what wins votes.”

Sectarian and caste tensions have risen, for which the BJP bears considerable responsibility. In election campaigns, and particularly in its successful pitch to Uttar Pradesh’s 220m people, the party has harped on its predecessors’ supposed “appeasement” of minority groups. In fact, India’s 14% Muslim minority is, by most measures, little better off than the 17% who are dalits (the lowest caste, formerly known as untouchables). But that does not seem to matter. Indian Muslims feel they are being penalised for having dominated India in the past.

After his party’s election victory in Uttar Pradesh, Mr Modi appointed as its chief minister a saffron-robed priest, Yogi Adityanath, who sponsors a right-wing Hindu youth movement. State police now harass non-vegetarian restaurants and Muslims who have allegedly seduced Hindu girls, but pay scant heed to incidents such as an attack in May by upper-caste Thakurs on low-caste dalits that left one person dead and dozens of houses torched. Elsewhere in India, cow “protection” vigilantes have repeatedly attacked Muslims suspected of slaughtering cattle, often with fatal consequences. The response from BJP-run state governments has been muted at best.

Mr Modi’s government has pursued a Hindu-nationalist agenda in other ways, too. Religious conservatives have quietly displaced India’s old, privileged secular elite at the helm of universities and other state institutions. The BJP has so far made less headway with plans to reform the judiciary, which remains wary of executive influence, but it has had some success with the press, much of which is owned by big business conglomerates keen to toe the government’s line. Indian television, in particular, has been infected by a style of hyperbolic ranting that makes some debate programmes hard to watch. Media that remain critical of the government have faced problems ranging from withdrawal of government advertising to spurious tax raids, lawsuits on the basis of antiquated rules and harassment on social media by legions of pro-government trolls.

India’s press remains diverse, exuberant and healthily inquisitive, but journalists now fear being branded “anti-national” for suggesting such things as less harsh means of calming Kashmir, or a more accommodating policy towards China. The sense that space for public discussion is closing up is so strong that dozens of retired officials from the elite Indian Administrative Service issued a public letter in June warning against “rising authoritarianism and majoritarianism that does not allow for reasoned debate, discussion and dissent”.

Other Indians have a simpler way of voicing their worries. “It’s ironic,” sighs a Delhi dinner hostess. “We’ve come all this way in the world, and have a strong leader and a strong government, but this country is looking more and more like Pakistan.”