China is one of the hottest topics in foreign policy these days. As I made clear in a previous post (“A New Power Arises in the East”), its rise is reshaping international affairs, provoking fears in its region while simultaneously opening up opportunities around the world. The 21st century is spoken of as “the Chinese Century,” and pundits worry (or hope) that China is destined to uproot America, the West, and the whole friggin’ international order and reshape the planet to its whims.

Meanwhile, in China’s neighborhood, there’s another nation, almost as large in population, significant in land area, and burgeoning economically, but it’s sometimes overlooked. Even when it’s not, it’s rarely spoken of in the same impressed or ominous tones as China, and many foreign observers don’t seem entirely sure what to make of it.

This is the story of India, Asia’s other rising giant.

India has always been considered one of the world’s greatest, most ancient civilizations. The fertile Ganga Valley (along with other, lesser river systems) and humid climate make it one of the world’s most thickly populated areas. It sticks out into the Indian Ocean and is separated from the rest of Asia by the massive Himalaya Mountains, yet is big enough to be considered a “subcontinent,” not a peninsula. Its relative isolation gave it a distinctive culture, not quite like either West Asia or East Asia. It developed its own religion, Hinduism, which in turn had several major offshoots — Buddhism, Jainism, Sikhism.

But unlike China, India does not have a history of unification. The Mauryas unified almost all of it in the 200s BCE, the Gupta Empire in north India was culturally significant (300s), and the Mughals more or less reunified it by the 1600s, but for most of its history, India was defined by fragmentation. Regional dynasties and minor empires shaped Indian history, and interaction with the outside world was fairly minimal. While India never went full-blown isolationist like China and Japan did — Indian merchants were trading in East Africa in medieval times, and south Indians colonized Southeast Asia — geography and cultural outlook conspired to make India an inward-looking area. It was subjugated by foreigners numerous times, from the Aryans 3,500 years ago to the Mughals in the 1500s.

The most consequential foreign invasion came in the 1700s. European colonization started off slowly — some European forts in strategic coastal ports, some white envoys in the Mughal court negotiating trade deals — but gradually escalated until the bulk of the subcontinent was under British rule. The British enforced their rule ruthlessly, suppressing insurrections, resorting to legal shenanigans to seize more territory, and draining Indian resources for the benefit of the homeland. The colonial social and economic structure oppressed India’s hundreds of millions of peasant farmers and reduced them to paupers. Famines periodically ravaged the colony, and locals were barred from meaningful government jobs. For these reasons British rule is often resented today, yet the Brits also introduced modern education, health care, trains, roads, bureaucracy, legal system, capitalism, finance, a crack civil service and some impressive architecture.

As a result of this, a parliamentary system inherited from Britain, and a genteel and intellectual group of founding fathers, India fared comparatively well in the early years of its independence. Its first prime minister and secondary Founding Father, Jawaharlal Nehru, steered India onto a moderate and gentle course. India’s ethnic, religious and linguistic diversity were respected and its various ancient oppressive religious laws were scrapped. Yet in many ways Pundit Nehru (as he is usually referred to in India; “Pundit” refers to his caste) proved to be too idealistic and naive for a political leader. His foreign policy favored non-alignment with the feuding superpowers of the Cold War, which earned him suspicion and alienation from the West and didn’t prevent India from being attacked by China. His economics favored a strong role for the state and socialist policies which failed to make long-term dents in India’s fearsome poverty. His successors (the main one was his daughter, Indira Gandhi) largely continued these strategies. The result was an India mostly cut off from the outside world and with a dismal economy by the 1970s. Its average per capita income growth in those years was a mere 1.3% and its growth rate was around 3.5%, which was referred to derisively by economists as “the Hindu rate of growth.”

By the ’80s it was clear that India needed to change. Its infamous “Licence Raj,” which hamstrung the economy by requiring all sorts of licenses, permits, and quotas for everything, began to be dismantled. But it took a real crisis to shake things up, and that came in 1991, when India’s external debt reached $70 billion with almost no foreign exchange reserves left to pay for it. Manmohan Singh, the finance minister, got cracking: barriers to free enterprise came crashing down, foreign investment was finally welcomed rather than shunned, the rupee (India’s currency) was devalued, tariffs were reduced, and government spending was curbed.

These weren’t short-term measures, either. India’s government finally gave up its command economy principles, and Singh’s economic liberalization became a long-term program. Growth in the private sector was encouraged, and sectors of the economy reserved for the state (most of them corrupt and inefficient) were opened up. Change came quickly. India’s economy roared to a 6.9% growth rate in the decade before the 2008 crash, with an 8.5% growth rate in its headiest years (2002-2007). Leading the charge were India’s software companies and call centers, which capitalized on India’s well-educated English-speaking professionals and its useful time zone on the opposite side of the world from America. But growth was widespread, from the manufacturing sector to pharmaceuticals to the film industry. A middle class emerged while the upper class expanded. A consumer economy developed, along with the gleaming shopping malls and posh resorts that showcase it.

India’s sophisticated, well-managed businesses, emphasis on innovation, and a diaspora with lots of smart white-collar workers familiar with Western culture impressed the world in the 2000s, leading some to wonder if India would soon rival China, or indeed the West, as a world power. Its statistics — population, economic growth, poverty reduction — stunned outsiders. It was all at odds with the most common image of India in foreign media: an impoverished, miserable Third World country, with horrible sanitation, violent crime and ingrained social oppression.

Sadly, this image of India is not far from the truth. Although conditions have improved a lot since the bleak ’70s, when many tut-tutting foreigners predicted India’s demise as a nation altogether, most Indians still live in abject poverty. For the most part the well-developed and industrious parts of the country benefited from the economic boom while the peasant farmer, which is still what the average Indian is, struggled to survive on subsistence income. Vast slums continued to ring India’s major cities. Caste politics and discrimination (which are too complicated to explain here) continue to bedevil many parts of the country. Education, health care, and other social services remain unreliable. Corruption permeates everyone’s life, from the penniless laborer’s to the billionaire financial magnate’s.

Meanwhile, overseas India’s rise didn’t cause many ripples. Its economic boom propelled a few other countries, like Britain, which became a target of Indian real estate investment. Its nuclear weapons program, although technically illegal under international law, was tacitly accepted. India became a prominent contributor to the UN. But fears of a new superpower like China died quickly. India’s military spending lagged behind China’s. In general it avoided involving itself in international crises during the boom years. Even though the Cold War, and therefore the original context for non-alignment, is over, that policy still guided India’s foreign affairs, and it tried to avoid the recurring disputes between the Western powers and Russia and China.

But India had undeniably changed much over the 2 decades since its economic liberalization. Its already frenetic cities and markets became even more bustling, energetic and crowded. Urbanization, while a shadow of China’s, is an ongoing trend. Indian diplomats were more strident and forceful than before, and demanded a seat on the UN Security Council (the part of it that matters). A growing sense of exuberance, ambition and optimism took hold everywhere, from universities (where students had renewed faith in opportunity and their future), to the mass media (which multiplied in number and expanded in breadth of coverage), to the film industry (which became more dazzling, higher-budget and somewhat less cheesy), to cricket (which became faster-paced, more celebrity-focused, and more raucous). The older generation might not like it, and Mohandas Gandhi, India’s primary Founding Father, would probably hate it, but India is now more aggressive, more self-confident, and more ambitious than ever before.

Alas, all parties must someday come to an end. Partly as a result of the global economic crisis of 2008-09, partly as a result of more complex domestic economic forces, India’s economy slowed down to a rate of 5% growth last year. Inflation is high, savings and investment low. Corruption, always a factor of Indian life (and ubiquitous worldwide, I should add), has begun to damage the economy, with politicians and powerful businessmen demanding bribes for everything. The playing field, already distorted by India’s huge structural inequalities, is more and more skewed. Consumer and investor confidence is sagging.

The biggest news in India recently is its new prime minister. Singh, while capable, failed to restrain the economy’s decline in his second term as prime minister (2009-14), nor did he restrain his own government’s greed and inefficiency. His political party, the Indian National Congress, had dominated Indian politics since its founding in 1885 and had become a stagnant, complacent party of patronage associated more with corruption and handouts to the poor than with good government or economic reform. In contrast, the opposition party, Bharatiya Janata (“the Indian People”), campaigned on a platform of economic growth and development. Its candidate, Narendra Modi, intoxicated Indians with his charisma, force of will, ambitious promises, contempt for the government, and business-friendly orientation. The election in the spring took on the air of a mass grassroots political upheaval, and Modi was swept into office by a landslide of 62% of parliamentary seats.

On one front, Modi has been impressive. Despite a fixation with domestic affairs, he launched his term with a flurry of diplomatic activity, inviting Pakistan’s prime minister to his inauguration and visiting Nepal and Bhutan, India’s neighbors and satellites, shortly thereafter. Modi has become good friends with Shinzou Abe, Japan’s prime minister, and won much-needed infrastructure investment from him, as well as increased defense cooperation. He has visited America and got along well with Barack Obama, despite America’s earlier visa ban on him (he has a controversial past). And Xi Jinping, China’s dictator, acknowledged Modi’s importance by visiting India within 4 months of Modi’s victory and promising $20 billion in investments.

But domestic reform remains Modi’s main objective, and he hasn’t achieved too much to talk about. His energy and workaholism has rejuvenated India’s bureaucracy, and India’s famously sclerotic civil servants are now expected to perform to much higher standards. But the barriers to trade and investment like tariffs and licenses that continue to hold back Indian economy remain odious. Financial reform has been unimpressive. Although confidence in India is surging, and Modi has made a good impression abroad, many within and without India are nervous that Modi won’t have the courage to reshape his country after all.

India presents one of the 21st century’s greatest opportunities. Its huge, mostly young population, knowledge of English, representative democracy, commitment to the rule of law, business and technological acumen, plucky energy, and unique cultural position — familiar with the ways of the East but steeped in Western thinking and with a somewhat Western outlook — can be and have been harnessed to drive prosperity at home and abroad. It doesn’t pose a threat the same way China does — one never hears about India “taking over the world” or about anxious parents forcing their kids to learn Hindi. I am optimistic about India, and foresee a future when it rivals China as an economic giant and a political power and is fully acknowledged by outsiders as a Great Power. Its democratic government and bottoms-up economic development could serve as a model for struggling countries elsewhere; as far as state-directed enterprise is concerned, India, with China, provides history’s clearest example of how ineffective it is.

But facts must be faced. India is still very poor. 40% of the world’s poor are Indian. 300 million still struggle to get by on $1 a day. None of the dreary social facts I outlined above have changed. India’s economic success hasn’t quite trickled down to the great mass of India outside of the cities, which still lacks reliable power, water, education and governance. Parts of India, including its heartland, the Ganga Valley, are as poor as anywhere in the world — per capita GDP in Bihar, a state there, is $360. India never really followed the examples of its neighbors in East Asia and promoted education for the masses, with the result that literacy is relatively low (74%). India’s demographic boom is going to waste, with most of its young workers going to farms, driving modern-day moguls around bumpy roads, sitting outside buildings all day (as security guards), or toiling away in mines and factories. Unless India can educate its populace and bring it into the 21st century, it will never reach its full potential, and will probably remain on the margins of international discourse and an object of scorn among richer nations.

India’s international posture also needs an upgrade. Indian diplomats still long for non-alignment and resist involvement in international disputes. (Its foreign service is the same size as tiny Singapore’s!) To be fair, most countries take this stance, but India can do a lot more to be relevant globally. Its navy could dominate the Indian Ocean, taking advantage of America’s decline and focus on the Pacific. It could assist in developing beleaguered Afghanistan after NATO withdraws from it. Enjoying relatively good relations with both America and Russia, it could mediate the current dispute between them. It could cooperate more in the global fight against terrorism, as it is a favorite target of Muslim fanatics. It could project its soft power more aggressively in Southeast Asia and East Africa, two regions where it has had historic sway. Ultimately, it needs to balance out China as a hegemonic power in East Asia, something that America realizes but really needs to do more to work on. Partly because of its Hindu worldview (which favors accommodation and consensus over confrontation) but mostly because it has pressing problems at home, India has stayed on the sidelines of world affairs for its whole history. But as a responsible power with a democratic outlook and a commitment to nonviolence and tolerance, India could be a force for good in the world. The new world order won’t be dominated by America for too much longer, and India needs to evolve into a non-Western alternative to the more authoritarian model provided by China.


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