El Cid – the degree to which New Delhi will be willing to cede economic policy to federal state level will be a test of the centre’s political maturity and confidence.

Investment in Infrastruture is the key:
With the exception of telecommunications, the cost of most infrastructure services is 50–100 per cent higher than in China, with Indian manufacturers paying twice as much for electricity and three times as much for rail freight.

The gap is widening, too. China spent seven times as much as India on infrastructure in 2003, the latest year for which figures are available, and three times as much relative to the size of its economy – $150bn (10.6 per cent of gross domestic product) compared with $21bn in India (3.5 per cent of GDP), according to Morgan Stanley.
http://neweconomist.blogs.com/new_economist/2005/11/india_the_expor.html#more

The economic progress of Malaysia under autocratic rule is also worth considering.

Good article

Your reply makes no sense at all.

M.Singh was the best Finance minister we ever had and will be one of our best PMs toot.He has the support and respect of people in India across idelogical lines.

I agree with Sandeep’s contention that India is the wrolds biggest and most important social experiment.Japan , South Korea and Taiwan all had an American security guarantee and are under the nuclear umbrella, which allowed them to focus on development solely.They also benefitted from massive American aid and investment.Taiwan and South Korea both were under autocratic rule for the majority of their history.I am not bellitling at all their very impressive achievement, just trying to highlight how India is different.Also Japan, SK and Taiwn are all realtively ethnically homogeous countries.
Coming to the US, it was a slave economy for almost 200 years after Plymouth rock.It was a democracy all right, a white, male democracy for much of it history.
African Americans got their civil rights only in the 60s .
India has had universal suffrage snce 1947.

But look at India’s social stratifications and backwardness, it’s religiosity and patriarchy. Put all that in a mix, a country almost the size of a continent, with one billion people, and the scale of India’s problems, and potential, differentiates it.

I am with you on the dangers of trickle down not trickling down – your point about massive capital spending on infrastructure and education to ensure as much as possible equality of opportunity is something I agree with.

Sandeep: While I like Manmohan Singh, I do believe he is exaggerating slightly America was a democracy almost from the start as it developed into a modern economy, while taking in and successfully absorbing millions of immigrants throughout (and continues to do so).

South Korea and Taiwan are democracies, if rather more consensual than the turbulent times we have had. Even Japan developed since 1950 (with a much much smaller industrial base) as a democracy and overtook us ages ago.

So one could say, yeah its a rather big experiment, but I wouldn’t say India is the only democracy to have tried it. I’m not sure what “social revolution” he is referring to, but for example… Japan had to get over two nukes on its cities and having lost a world war with great humiliation. I’d say that was bad enough. South Korea and Taiwan have developed more recently, doing the same (trying to tap into the global knowledge economy) while dealing with potential problems (North Korea and China respectively).

I don’t want to give too much credence to Singh because he doesn’t have much of a specific plan to lift people out of poverty either.

The general theory in vogue is the Milton Friedman “trickle down effect”. Everyone hopes that as the top strata does well, the benefits will trickle down.

Unfortunately it has never really worked like that, and the danger is you lead to more social unrest. India has never been more unequal and every day it grows more unequal. That is asking for trouble.

YEah I sound like a pessimist, but that’s because I don’t buy the trickle down theory so readily despite growing up on a diet of The Economist

The way out is hardcore investment into infrastructure – so much so that they become cheap and accessible to the poorest of the poor – not privatise the damn companies but to make them efficient and expand their activities. But little of that is happening.

http://cyber.law.harvard.edu/globalvoices/-/world/east-asia/china/

But my point is right now in absolute terms we are not that far ahead. The groundwork is being laid down for future expansion, but I’m not convinced this is the best way to lift the hundreds of millions out of poverty in a way China has done.

What scope does India have to act as China has done? India has to do it her own way, under the restraints of her own polity. It is a slow start and I acknowledge your cautiousness to stave off the ‘India Shining’ complacency, but now is the time to support these foundations that are being laid down.

Your point about state spending on infrastructure projects is something that I would like to know more about. It is definitely needed. Not only for short to medium term job creation, but because without basic infrastructure India will always lag behind.

What Manmohan Singh has said is true – I cannot think of another example of a society attempting to do what India is doing now, especially now that a consensus on direction has started to form – to integrate an economy into a global economic system on the basis of high tech, knowledge workers, whilst carrying at the same time, and trying to alleviate, a large population mired in poverty. It will take generations. But there is one thing we should never deny people – that is the opportunity to participate in the growth of the Indian economy. To keep the wealth flowing downwards will be the key to harmonising the Indian economy with its people. This is the challenge – but can you think of any model in history for this, that has been attempted with the polity, the size, and the extremities of poverty and wealth that India has?