Is "I" an alphabet or a letter?

I came across this sentence,

"Modi understands only one alphabet, and that is the capital I"

in the Indian writer Dr. Shashi Tharoor's recently published book "The Paradoxical Prime Minister".

When I looked the word 'alphabet' up in dictionaries, I get the definition as 'a set of letters or symbols in a fixed order used to represent the basic set of speech sounds of a language, especially the set of letters from A to Z'. (Oxford Living Dictionaries)

Why was 'alphabet' used here?

In standard US and UK usage, an alphabet is a system or collection of letters, a letter being

A written symbol or character representing a speech sound and being a component of an alphabet. [AHD]

In Indian English, however, the word alphabet is sometimes used synonymously with letter, which is all that has happened here. A web search turns up innumerable examples, including sources one might expect to have a good level of English proficiency:

Of these students, only 22% managed to read their Hindi textbook while only 43% could read a paragraph, 14% could read a word, 13% could read only the alphabets and 8% could not even identify an alphabet. (The Wire)

Please enter the alphabets and numbers in the exact way as they are displayed without any space. (CAPTCHA for the Government of Nagaland)

Earlier in the month, the company had posted a beautiful time-lapse photo of a traffic junction, which is in the form of an alphabet 'X'… (International Business Times, India edition)

I had taken it on myself to teach them the English alphabets.… Every day after my farming chores were completed around 11 am, the children would sit on a “charpoy” … [t]hen for a couple of hours I taught them the alphabets from A to Z. (Column in the Free Press Journal)

India of course has many languages and several different alphabets, so the use of alphabet to mean letter may have arisen out of a lexical gap for distinguishing corresponding characters of different case:

Do not rush her into picking up all the alphabets by the end of the first week. Remember it is 26 new alphabets and 52 letters (both upper and lower case included), and that’s a lot for her little brain. (Magic Crate blog)

Technically, one letter could be an alphabet. By the definition you provided, an alphabet is a set of symbols or letters. This set could theoretically contain any number of letters.

• The Latin alphabet is a single set of 26 letters.
• The Greek alphabet is a single set of 24 letters.
• The Arabic alphabet (technically abjad) is a single set of 28 letters.
• The hypothetical alphabet in the sentence is a single set of 1 letter.

So while in the sentence it is used as a hyperbole to mean that the individual thinks only of himself, it's possible that the letter I could also be an alphabet in which it is the only letter.