India: Miracle, Interrupted

Indian scholars and authors like to write about something they call the “idea of India,” a loosely defined concept of national identity. It’s an attempt to impose a measure of coherence on the messiness of a country of 1.2 billion people. That messiness, however, is real. From the ground, it’s hard to imagine how a single idea could ever capture India’s reality.

Perhaps that’s why observers of the subcontinent (both domestic and foreign) tend to retreat to easy generalizations and simplistic narratives. For much of India’s post-independence history, the country was an economic basket case—a textbook example of financial mismanagement, wasted potential, and stunted growth. Then, in the 1990s, after India embarked on market reforms and began opening its closed, semi-socialist economy, the narrative changed. As native companies aggressively acquired international brands, and as growth rates approached double digits, the media was full of triumphalist rhetoric about impending “economic superpowerhood.”

Over the last few months the narrative appears to have shifted again. Growth has slowed from more than 10 percent in 2010 to around 7 percent today. Inflation is persistently high, agricultural productivity has declined, and foreign investment and the stock market are down. Social unrest and deteriorating law and order in many parts of the country have potential investors spooked. Corruption is estimated to cost India at least $18.4 billion a year.

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