January 08, 2004
The Big Things
Posted by Gordon Smith

India is a country with a long and fascinating history. Since gaining independence in 1947, however, India has struggled to find itself after 200 years of British rule. One of the professors I have met here described India's early post-independence relationship with the U.S. as one of "unrequited love." Of course, that history is complicated, but India ultimately turned to the Soviet Union for guidance and aid. The legacy of that decision still weighs heavy here.

India was a typically unsuccessful socialist state that began the process of gradual reform in the 1980s. The country hit bottom in 1991 and undertook more dramatic government liberalization. While the effect of these reforms is much debated, free marketeers agree that India has not gone nearly far enough.

Not a day passes without a news story about the effect of the IT revolution on India. (Look here if you don't believe me.) As a newcomer to India, I found the need to adjust my vision a bit -- Delhi is not Silicon Valley (though some claim that Bangalore is) -- but the evidence is indisputable. Software exports, BPO (business practice outsourcing), and ITES (information technology enabled services, like call centers) appear to have had an enormous psychological effect on this country, even if the real impact on this country of over one billion people is modest. Many of my hosts proclaim, "India has found its niche" in IT.

But IT will not save India. The country is too large for that. Other big issues loom. Most importantly, agriculture reform and education reform. Antiquated farming techniques and inadequate public schools threaten to stop India in its tracks.

The other big issue is infrastructure. Roads are horrible, but improving quickly. Telecommunications is booming. Mobile phones and wireless internet will speed adoption rates. Power supplies are the most contentious issue. Continued growth will demand more power, and India does not yet have a reliable system in place.

As you can see, the challenges here are enormous. Conquering those challenges would be difficult under the best of circumstances, and these are not the best of circumstances. India's multi-party democracy is broken and needs to be fixed. Strangely, the paralysis of India's government has made some here long for the efficiency of a totalitarian regime, like China's. Let's hope that's just talk.

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