ongoing cooperative activities provided by Dr. Dobriansky had been comprehensive, he would limit himself to expressing his contentment that collaborations between Americans and Indians are deepening and to observe that this trend signals a welcome and exciting change in the relationship between the two nations.

Basic Premises of Indian Economic Reforms

Mr. Ahluwalia noted that his talk would focus on the economic reforms that have been critical to altering perceptions in the United States and elsewhere of the state of India’s economy and of its relevance to the world economy. In their content, the Indian reforms have not differed greatly from those implemented in many developing countries. These reforms reflect India’s acceptance of four basic premises about a strategy for growth:

  1. Private enterprise is a critical driver of growth. The recognition that India’s private sector, which Mr. Ahluwalia rated as very strong, deserves support and encouragement has been critical to the reform effort. In his judgment, the country is quite capable of taking on competitors, provided the playing field is level.

  2. Competition spurs efficiency. Although India does not need to create a private sector, its reforms are in great measure designed to increase competition within the private sector already in existence.

  3. An open, integrated economy is preferable to a closed, insulated economy. There have been a number of initiatives aimed at opening India up to both trade and foreign direct investment.

  4. India’s private sector should be encouraged to seek opportunities abroad. Indian companies have begun looking at both new investments and acquisitions of companies offshore, a major change in the country’s economic environment that is creating a far more symmetric kind of globalization.3

In all four areas, India’s reforms have taken a gradualist approach, influenced by a pair of factors. The first is the strategic perception that it is better to exercise caution in moving forward than simply to undertake shock therapy. The second is a deliberate decision to move forward at a pace that would build consensus for change, thereby avoiding excessive controversy over any one issue. Mr. Ahluwalia reminded the audience that India is not only the world’s largest democracy but also a “very pluralist” one, that for the previous decade it had been run by coalition governments, and that the governments of its states were in the hands of a variety of political parties. As proof that a consensus in favor of change had been achieved, he cited the contrast between the national debate, which might often strike students of Indian politics as being at least somewhat contentious,

3

See, for example, The Economist, “India’s Acquisition Spree,” Oct. 12, 2006.



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