The India Model

Those arriving in New Delhi a day early for the recent World Economic Forum India summit were greeted by a smog so dense, so noxious, that it seeped indoors, giving a brackish smell to hotel lobbies and making one wonder whether India's breakneck economic growth was going to be accompanied by the sort of pollution that made hellholes of old industrial cities such as Pittsburgh and Manchester. By the next day, thankfully, the smog had dispersed, and though that was probably because of a change in the weather, it was easy to believe that it had been blown away by the gale of optimism and self-confidence that India's leaders now routinely display. Though India's boom has been tempered by the global economic crisis, Prime Minister Manmohan Singh told the summit that he expected growth in fiscal year 2009-10 to reach 6.5% — hardly shabby — before recovering in the medium term to the 8% to 9% that was seen in the years before 2008.

But headline growth numbers are just the start. It is the sheer ambition of India's government that takes the breath away. At the World Economic Forum meeting, Kamal Nath, the Road Transport and Highways Minister, outlined a 12,500-mile (20,000 km) highway-construction program that will require India to build 121/2 miles (20 km) of new roads a day — and that is only a part of a gobsmacking infrastructure program that will include more power generation, more air- and seaports, more irrigation projects. Singh stressed the importance of nationwide improvement in education and health, which will also involve huge amounts of public investment. And if that is not enough, the government is committed to increasing the living standards of the hundreds of millions of Indians in rural areas who live on less than $2 a day, while ameliorating the state of the cities to which many of them are flocking, in a mass urbanization that in human history has been rivaled only by the one now under way in China. (See pictures of India's tempestuous Nehru dynasty.)

These are extraordinary goals, and given India's population, ones of extraordinary reach. They would task the best-run nation in the world. But ask some Indian officials how the objectives are supposed to be achieved by a public sector that has not — let us put this charitably — always been known for its Prussian efficiency, and you will be told, in effect, "No problem." Past performance (as the prospectuses of mutual funds say) is no guarantee of future returns. Just because India's progress was for years strangled by red tape and corruption, there is no reason to think it always will be. Just because India's political system is noisy and disaggregated, with power dispersed between the central government and states, does not mean that it can't deliver. "I don't regard dissent and different views as a sign of dysfunctionality," Montek Singh Ahluwalia, the influential deputy chairman of India's Planning Commission, told me.

There are two reasons to hope that he is right. The first, naturally, is that India's 1.1 billion people deserve to have better life chances than they have had. Its villagers deserve power and clean water, its girls deserve to be able to stay in school beyond the primary grades and its sick deserve a functioning health care system. But second, the world could do with an example of rapid development on a massive scale that is not beholden to an autocratic, closed political system. China proves that such a system can provide better living standards for hundreds of millions, and that simple fact is immeasurably enhancing China's reputation and soft power in the developing world. Brazil and Indonesia are proving that democracies can deliver too. But India's size and the measure of its challenges make it a special case. If India can translate raw figures of economic growth into widely shared prosperity, then it will not just be Indians who benefit. It will be the whole world, as democracy will be shown to be compatible with improvement in human development at a similar scale as China's. (Read "China Vs. India: Will Rivalry Lead to War?")

How will India do it? The key to sustained 9% growth, says Rajat Nag, the managing director general of the Asian Development Bank, "is governance." Behind that new buzzword lies a fundamental truth. The successful modernization of societies, it turns out, is not just a question of economics — of getting the macroeconomic fundamentals right and letting market forces and the private sector do the rest. It depends also on having effective, clean governments, at every level down to the village, which do not waste economic largesse or appropriate it for the use of their own politicians and officials. That has long been understood in true exemplars of development like Singapore. It now needs to be adopted, seriously and comprehensively, by India. If that happens, India really will be the shining success story that its leaders so manifestly believe it is going to be. India will be better for it. And so will the world.

Read "India's 1984 Anti-Sikh Riots: Waiting for Justice."

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