Almost two decades after economic liberalization, the absence of critical reforms means that for a majority of Indians daily life continues to be a struggle – … India’s weaknesses are all within, in the continuing struggle to define the direction of our future ideas and policies for the country.

The above is part of the opening from Nandan Nilekani’s book, Imagining India: The Idea of a Renewed Nation.   Now Nilekani is a part of the new India.  He is fact the co-chair of Infosys Technologies Limited. 

It appears the new India – one of the key large emerging market countries and member of the G20 Leaders Summit – is gaining some traction.  July 14th will be a ‘red letter’ day for the new India – and it’s not about any revolution.  On the date New Delhi’s new international terminal airport will open.  Subramaniam Sharma and Vipin V.  Nair with Bruce Einhorn in Bloomberg Businessweek, July 5-July 11, 2010 in an article, “Finally, a Modern Passage to India,” describes it as, “78 gates, 97 automated walkways, 95 immigration counters,” and more.  Better still, the terminal was built in just 37 months a faster pace than was the case for Beijing’s famous third terminal. 

But infrastructure is a critical bottleneck.  India spends some 6.5 percent of GDP on infrastructure but in comparison China spends 11 percent.  The result is that India has chronically poor roads, power plants and ports.  But the airport building –Bangalore and Hyderabad and now New Delhi - appears to be a concerted effort to improve infrastructure by India. 

Another sign of the new India is the determination of the Indian Government to eliminate fuel subsidies (Heather Timmons and Hari Kumar, “Protests over Fuel Costs Idle Much of India, NYT, July 5, 2010).  The previous month the Government announced that it would raise the price of gasoline by 3.5 rupees a litre (about 30 cents a litre).  Diesel and kerosene prices will also rise.  The effort here is for the Congress Party coalition to put a brake on such subsidies and reduce the burden of such subsidy programs on government (in the case of the fuel subsidies, the cost to the government is some $11 billion this fiscal year).  The effort appears to be for the government to reduce broad-ranging subsidy programs for more targeted and less inefficient programs - on this case employment programs. 

The BJP, the main opposition party, relying on a classically populist approach, called for street opposition by the poor.  Popular protests in fact emerged across a number of Indian cities.  While these protests disrupted life, it appears that the resolve of the Government has not been shaken.  For a new India it will be critical that appeals reactive appeals to the poor do not lead to public programs that impede economic growth and tie the poor to inefficient public support.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.