The New Core pillars at risk (India)
"Premier of India is Forced to Quit After Vote Upset: Party of Gandhis in Lead: Poorest Seem Angry with Uneven GainóA Family Returns," by Amy Waldman, New York Times, 14 May, p. A1.
"New Government In India Pledges To Push Growth: After Congress Party Win, Sonia Gandhi Is in Line to Be First Foreign-Born Leader," by Jay Solomon and Eric Bellman, Wall Street Journal, 14 May, p. A1.
The victory by the Congress Party was a shocker, but this was a clear signal from the masses that they did not want to be left behind in "India Shining," the ruling-party's slogan describing how far the nation had come under their privatizing rule.
Will the return of the socialist-leaning Gandhis mean a return to the "Hindu rate of growth" (heavy state sector, highly protectionist, and very poor attractor of foreign direct investment)? We can only wonder. The nostalgia for sort of watered-down form of socialism has never left the political sceneódespite its decades of poor performance.
People on Wall Street five years ago told me that within a half-decade India would be as hot as China was back thenóand they were right. But if enough boats aren't lifted by that tide, you'll get political reversals in a democracy with an anti-incumbent streak like India. But it will be hard for even the Gandhisóled by presumptive Prime Minister Sonia (she being Italian-born, and originally a Christian to boot!)óto turn back that political clock with China growing like gangbusters.
China and India were almost exactly the same back in 1980, by most per capita measures, but today China is leaps and bounds ahead, thanks to the economic reforms Beijing has pursued. That powerful example has been a great goad to India's reforms of the past decade, and it's not likely to go away even if the BJP is out of power now.
Already key Congress Party players are not only pledging to continue the recent rapid growth, but bragging that it really began under their rule in the early 1990s (actually trueóunder assassinated PM Rajiv Gandhi). So there's real hope that non-comformist Sonia will be more of a Clinton liberal than some gawdawful throw-back to the old days and the "third ways."
There's nothing wrong with campaigning on behalf of the little people and making the case that they have to share in the opening up of India to the outside world as much as the high-tech and service-industry people have. But a return to the protectionism of the past would be a disaster for India, killing a lot of great economic connectivity built up with the outside world over the past decade.
India is a such a bell-weather state for globalization, so a close eye on this development is warranted.