Magazine

Opportunity Knocks In India


The appropriate first response to India's election is applause. The surprise victory by the Indian National Congress Party, led by Sonia Gandhi, over the ruling Bharatiya Janata Party and the peaceable transfer of power that followed shows India to be a mature democratic state. In a world where far too many countries are ruled by authoritarian governments, this is a win for Indians who value a stable democracy and the right to preserve it at the polls.

Now the new government must keep India on the path of economic growth. The difficulty of that mission should not be underestimated. History shows that many developing nations enjoy a few years or even a decade of growth only to run into problems later. In the '80s, 14 countries had per-capita gross domestic product growth above 5% annually. But only two -- China and Taiwan -- were able to maintain that in the 1990s.

The incoming Indian government has taken a good first step by appointing Manmohan Singh as Prime Minister. He played a key role in liberalizing the economy as Finance Minister in the early '90s, keeping at bay those who wanted to limit the role of markets. Now he has the tough task of nurturing India's information-technology sector while spreading the wealth to the hundreds of millions of Indians, especially in rural areas, who still live in deep poverty.

One needed change is more support for education, especially at the primary and secondary levels. India has a literacy rate of 62% -- well below China's 85%. Improving that is key to providing skilled workers for high-tech companies as well as creating the sense that the nation as a whole is benefiting from growth. Similarly, India needs to improve its infrastructure. That means more widespread electricity, new roads, and upgraded sanitation, as well as irrigation for rural agriculture.

Finally, tax reform is needed to provide more revenue to fund development. Harnessing necessary government revenues without crushing growth will require some deft political maneuvering by the Singh government.

This is a crucial moment for India. Singh clearly has a mandate to improve the lot of India's rural poor. If he can do that and maintain investor confidence, it will go a long way toward assuring that India's impressive growth will continue.


Later, Baby
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