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Government Investigations on the Rise in India as Modi Consolidates Power

India’s 2024 general election is expected to culminate in a landslide victory for Prime Minister Narendra Modi and his Bharatiya Janata Party (“BJP”), which leads the National Democratic Alliance ("NDA") and may take as many as 400 seats in the Lok Sabha, the lower house of Parliament. With the BJP increasing its influence, many political observers are concerned that India is becoming a one-party authoritarian regime. Opposition politicians have complained that they are being unfairly and disproportionality targeted for corruption investigations by the Enforcement Directorate (“ED”). Critics have also argued that Modi has captured the bureaucracy by replacing technocrats with loyalists who will not oppose his agenda. The prime minister is also said to be using welfare programs as campaign tools, in part by affixing his name and likeness to the distributions of basic commodity assistance.

Other observers say complaints of creeping authoritarianism misrepresent the political situation. The BJP came to power through elections that are “generally free and fair,” according to Freedom House. Modi has defended the actions of the ED and other law enforcement bodies, noting that “all agencies are completely independent to act against corruption.” If voters give the NDA more than 400 seats in 2024, many of his supporters say it is because of Modi’s stewardship of the economy which has seen an average annual growth rate of 5.8% since 2014. Furthermore, federalism is alive and well in India, with 12 of India’s 28 states controlled by a party outside the NDA. State governments remain powerful forces in Indian politics as they compete with each other to offer incentives to attract foreign direct investment.

Regardless of the motive, since Modi came into power in 2014, India has seen a significant uptick in investigations by the ED, Central Bureau of Investigation (“CBI”), and Income Tax Department. In this decade, the ED has conducted more than 3,000 money-laundering raids, a significant increase from the 100 or so actions taken by the Directorate in the preceding decade. Government investigations and prosecutions have also been more successful under Modi. For example, CBI’s conviction rate reached almost 75% in 2022. 

Increased regulatory activity has been a boon for law firms, tax advisors, and risk consulting firms engaged to defend individuals and companies under investigation. Law firms also point to India’s Insolvency and Bankruptcy Code, passed in 2016, which consolidated the country’s rules for bankruptcy proceedings, spurring increased litigation work and asset searches. As there are no indications that, if re-elected, Modi will backtrack on any of his economic reforms, the door to growth in the legal and investigations sector remains open.

India's main financial crime fighting agency has investigated well over a hundred opposition politicians in the past decade, drawing criticism it has become a weapon of Prime Minister Narendra Modi and his party to cull political opponents. In the latest in a wave of detentions, raids and questioning of opposition politicians, the Enforcement Directorate (ED) arrested one of Modi's most trenchant critics on Thursday, just a month before India holds a national election.


political risk & strategic intelligence, anti-corruption & fraud investigation, foreign & corrupt practices act, compliance, asia-pacific