A combination of factors is inexorably pushing India toward what may be described as a political and economic watershed. The decisions and actions that its leadership takes-or fails to take-this year may shape the history not only of India but perhaps of Asia for a long time to come.
A combination of factors is inexorably pushing India toward what may be described as a political and economic watershed. The decisions and actions that its leadership takes-or fails to take-this year may shape the history not only of India but perhaps of Asia for a long time to come.
To say that affairs in India have reached a watershed is perhaps an understatement or a euphemism. It would be more accurate to say that the country is faced with the biggest crisis since its independence twenty years ago. The coming months will show whether we have the capacity to face it determinedly or will move apathetically down the slippery slope of economic chaos as China did some thirty years ago.
None of the problems and challenges that India is facing at present is new or unexpected. At various times since independence we have been confronted with each of them. We have also had adequate warning that they were developing. What makes the situation so difficult and disheartening-many in India sincerely doubt if the country has the capacity to face it-is the fact that such a large number of problems have to be dealt with simultaneously. To give only an abbreviated list of them, India's population has crossed the 500 million mark and its annual rate of growth shows no sign of declining from 2.4 percent; its economy is stagnating; its once ample resources have been frittered away on grandiose schemes which have failed to pay the expected dividends, and its treasury is literally empty; it has experienced three successive years of drought, a phenomenon unparalleled in living memory, and consequently has a food deficit this year conservatively estimated at twelve million tons; the monolithic Congress Party, which won the country its freedom and has held it together since independence, is crumbling and in certain areas its place is being taken by political parties lacking broad vision or dedication to national unity; charismatic national leaders like Mahatma Gandhi and Jawaharlal Nehru have been replaced by ones with local or at best regional followings and limited political wisdom; disenchantment with the leadership is widespread and the country seems to be losing its self-confidence.
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India's elections aroused fears about its political viability but elicited yawns about its economic health. The reality of India's prospects is just the opposite. Conventional wisdom aside, the main threat India faces is economic. Slower growth and a stalled program of economic reforms could endanger India's stability. Its politics, by contrast, exhibit an admirable ability to bring extremists, including the Hindu nationalists of the newly preeminent Bharatiya Janata Party, closer to the center. India's democracy is the glue that keeps the country together; its economy, if not reformed, could cause dangerous strains.
The West accounts for a disproportionate share of world income because it has already passed through capitalist development. Now that Asia is becoming capitalist, it will return to the center of the world economy, where it was in the early nineteenth century. Current currency crises are only blips on the screen. Asia's miracle transpired not because of shrewd industrial policy or great leaps forward but because countries attracted foreign investment and moved up the development ladder one rung at a time. But ahead lies the challenge, particularly for India and China, of establishing modern governments.
After being shackled by the government for decades, India's economy has become one of the world's strongest. The country's unique development model -- relying on domestic consumption and high-tech services -- has brought a quarter century of record growth despite an incompetent and heavy-handed state. But for that growth to continue, the state must start modernizing along with Indian society.
