It is often jokingly said that “anything you can say about India, the opposite is also true.” The country’s national motto, emblazoned on its governmental crest, is Satyameva Jayate: Truth Alone Triumphs. The question remains, however: Whose truth? It is a question to which there are at least a billion answers. India stands today on the cusp of four of the most important debates facing the world: The bread Vs freedom debate: Can democracy literally “deliver the goods” in a country of poverty and scarcity, or do its inbuilt inefficiencies only impede rapid growth? The centralisation Vs federalism debate: Does tomorrow’s India need to be run by a strong central government able to transcend the fissiparous tendencies of language, caste and region, or is that government best that centralises least? The pluralism vs fundamentalism debate: Is the secularism established in India’s Constitution, and now increasingly attacked as a westernised affectation, essential in a pluralist society, or should India, like many other countries, find refuge in the assertion of a religious identity? And, the coca-colonisation or the globalisation vs self-reliance debate: Should India open itself further to the world economy, or does the entry of western consumer goods bring in alien influences that threaten to disrupt Indian society in ways too vital to be allowed? These are not merely academic debates: They are now being enacted on the national and world stage, and the choices we make will determine the kind of Indian dream we can hope to fulfil in the 21st century.

 

India — the second most populous nation in the world, and projected to be by 2015 the most populous--is itself being transformed. Writers like to attach catchy tags to nations, which is why you have read plenty about the rise of Asian tigers and the Chinese dragon. Now here comes the elephant. India’s economy is growing more than 8% a year, and the country is modernizing so fast that old friends are bewildered by the changes that occurred between visits. The economic boom is taking place at a time when the U.S. and India are forging new ties. During the cold war, relations between New Delhi and Washington were frosty at best, as India cozied up to the Soviet Union and successive U.S. Administrations armed and supported India’s regional rival, Pakistan. But in a breathtaking shift, the Bush Administration in 2004 declared India a strategic partner and proposed a bilateral deal (presently stalled in Congress) to share nuclear know-how. After decades when it hardly registered in the political or public consciousness, India is on the U.S. mental map.
Michael Elliott in Time cover story India awakens

On growth and inflation

All macro-economic parameters are good, but the inflation rate is the only worrying factor. The fact that the economy recorded the highest growth of 9.1 per cent in the

first half of any fiscal since economic reforms began in 1991-92 makes us doubly happy... I hope that the current year turns out to be one of the best year of economic growth… There is no limit to my expectations. Why should I limit my expectations? The inflation rate is slightly higher than we would have liked, but then I have said it is largely driven by supply side constraints. We should bring the inflation rate below 5 per cent and we must move toward 4 per cent.

India’s fast-growing states and industries have a certain success-breeds-success dynamic which will be difficult to derail. More worrisome is job creation for India’s growing unskilled labor force and the related problem of the laggard states, where the majority of low-skilled, undereducated Indians still reside. Ideally, of course, the laggard states would reform on their own. They would scrap archaic labor laws (few realize how pernicious these are because their effects, in terms of the labor-intensive firms that are unborn, cannot easily be seen), improve infrastructure and the business climate—and utilize their vast pools of underemployed low-cost labor to attract investment in labor-intensive manufacturing and agri-business. They would thereby catch up with the leading states in India. Unfortunately, though, there is a reason these reforms have not been undertaken so far—there are few things more persistent than bad governance.
Raguram Rajan of IMF in article India: The past in its future

Terrorism, emanating from Pakistan and motivated by the unresolved Kashmir-conflict, reached a horrible climax in the Mumbai Blasts, which killed 209 passengers on a suburban train on 11 July. But in the aftermath, Indian PM Manmohan Singh agreed with his authoritarian counterpart, General Pervez Musharraf, on a new Anti-Terrorism Mechanism, despite the latter being more concerned with the sales of his new book than with Pakistani national security. More than the nuclear solution, Iranian gas could help to provide India, with energy but a good price could only be made by a pipeline through Pakistan. Despite lacking any perspective for Kashmir, the arch-enemy will not be the decisive brake for Indian progress.

India’s economy, Asia’s fourth-largest, has grown more than 8 per cent in six of the past seven quarters, gaining 9.2 per cent in the three months to September 30. Sustained economic growth in India is fueling the inflation rate, which stood at 5.3 per cent in the week ended November 25, capping seven months above the government’s ``tolerance’’ level of 4 per cent.
Kartik Goyal in Bloomberg article India’s industrial output slows

…leaders in both China and India are awakening to the realization that greater equity, plus better protection for the environment and scarce resources, are needed to sustain growth and help lift tens of millions more out of poverty. Both governments have stepped up rural spending and increased subsidies to the poor, while attempting to attract more investment into backward, inland regions cut off from the growth centers along the coasts… The Indian government plans to spend $26 billion in 2005-2009 building rural homes, expanding irrigation coverage and providing drinking water, electricity and phone connections for all of the country’s rural villages. It is too early to say if those initiatives, as well as a rural employment scheme, will be able to meet their objectives or will degenerate into populist rhetoric.