Indian traders protest against a tax reform in Amritsar, March 30, 2005.
Munish Sharma / Reuters


India is attempting a transformation few nations in modern history have successfully managed: liberalizing the economy within an established democratic order. It is hard to escape the impression that market interests and democratic principles are uneasily aligned in India today. The two are not inherently contradictory, but there are tensions between them that India's leaders will have to manage carefully.

Students of political economy know that market-based policies meant to increase the efficiency of the aggregate economy frequently generate short-term dislocations and resentment. In a democratic polity, this resentment often translates at the ballot box into a halt or a reversal of pro-market reforms. In the West, such tensions have remained moderate for at least three reasons: universal suffrage came to most Western democracies only after the Industrial Revolution, which meant that the poor got the right to vote only after those societies had become relatively

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  • Ashutosh Varshney is Professor of Political Science at the University of Michigan and the author of "Ethnic Conflict and Civic Life: Hindus and Muslims in India" and "Democracy, Development, and the Countryside: Urban-Rural Struggles in India."
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