India Rising

But democracy has its own way of rebalancing. The wave of Hindu nationalism that raged through the country in the 1990s is on the wane, for now, and a thoroughly secular government is in power. Headed by Manmohan Singh, the former Finance minister who opened up India's economy in the summer of 1991, it is also committed to economic reform. In an act of great wisdom and restraint, Sonia Gandhi, who led the ruling coalition to victory in the polls, chose to appoint Singh as prime minister rather than take the job herself. As a result, quite unexpectedly, India's chaotic and often-corrupt democratic system has yielded as its head of government a man of immense intelligence, unimpeachable integrity and deep experience. Singh, an Oxford Ph.D., has already run the country's central bank, planning ministry and Finance Ministry. His breadth, depth and decency are unmatched by any Indian prime minister since Nehru.

But Singh has disappointed many of his fans. They had hoped for another set of large-scale reforms, but the government has been cautious and is implementing programs that look suspiciously like another round of subsidies (programs that have had such little success in the past). These are the constraints of democracy. Singh heads a fragile coalition government without a strong mandate for economic change. He is not himself a powerful politician, depending on Mrs. Gandhi for his clout. But his quiet determination to keep moving forward--on economics, politics and foreign policy--has been underestimated. His Economic ministers are all reformers. They work within the political limits, but they work. For example, infrastructure in India is slowly getting better and will be funded through public-private partnerships. India's two major airports will be privatized and improve dramatically. Every week you read of a set of regulations that have been eased or permissions that have been eliminated. These "stealth reforms," too small to draw vigorous opposition from the unreconstructed left, add up. And India's pro-reform constituency keeps growing. The middle class is already 300 million strong. Urban India is not all of India, but it is a large and influential chunk of it.

Democracy is India's destiny. A country this diverse and complex--17 major languages, 22,000 dialects and all the world's major religions--cannot really be governed any other way. The task is to use democracy to India's advantage. In some cases this is happening. The Indian government has recently begun investing in rural education and health, and is focusing on ways to make agriculture more productive. Good economics can sometimes make for good politics, at least that is the Indian hope. Another change is that, since 1993, democracy has been broadened to give villages greater voice in their affairs. Most important, village councils must reserve 33 percent of their seats for women. As a result there are 1 million elected women in villages across the country. They will now have a platform from which to demand better education and health care. It's bottom-up development, with society pushing the state.

Will the state respond? Built during the British Raj, massively expanded in India's socialist era, it is filled with bureaucrats who are in love with their petty powers and privileges. They are joined by politicians who enjoy the power of patronage. And then there are some journalists and intellectuals who still hold on to some romantic idea of Third World socialism. There are many in India's ruling class who remain deeply uncomfortable with the modern, open, commercial society that they see growing around them.

But the state fills a vital role. Look at India's great success--its private companies. They flourish because of a well-regulated stock market and financial system that has transparency, adjudication and enforcement--all government functions. Or consider the booming telecommunications industry, which was created by intelligent government deregulation and re-regulation. Or the Indian institutes of technology--among the world's best--all government-run. But that's just a start. The private sector cannot solve India's AIDS crisis or its rural education shortfalls or its environmental problems. If India's governance does not improve, the country will never fully achieve its potential.

This is perhaps the central paradox of India today. Its society is open, eager, confident and ready to take on the world. But its state--its ruling class--is far more hesitant, cautious and suspicious of the changed realities around it. Nowhere is this tension more obvious than in the realm of foreign policy, in the increasingly large and important task of determining how India should fit into the New World.