America should look at all of those young Indians as a major asset. Let's let a lot of them get their training in India and then come to the United States just as they are entering into their most productive years. Put them on a track to citizenship. We would greatly benefit by having young workers to support our retiring baby boomers. India would benefit by money sent back. The Indian immigrants would benefit because their skills could be fully utilized in a functioning, productive economy. And...the day when China can purchase more military equipment than the US would be put off a bit longer. That's good for everyone.

(1) Without the heavy-handed support by the state for rural agricultural workers, naturally more people would move to the cities to work. However, is there enough room in India's already crowded cities for hundreds of millions of new people?

(2) Would privatizing state-run firms actually help that much? China has done well with a far higher proportion of its firms run by the government, I don't see what utility selling the national steel company has except for making a small number of Indians much richer. If they are hopelessly inefficient, I could understand, but I haven't heard anything to that effect. What utility, either than bringing short term revenue, would selling the Indian national oil company, say? There are plenty of private Indian steel and industrial firms to invest in anyhow, like Reliance, Tata or Mittal.

(3) How will India deal with the persistent problems of extreme poverty in the slums and the deep jungles? Free trade alone will at best make some richer, but we've seen from the explosion of Naxalist "Maoists" against both the Centrists in Delhi and the "Leninists" in Calcutta due to the thuggish manner in which goods and economic property have been distributed.

The Indian government needs to take a far more proactive role in dealing with poverty alongside growth. Growth is pointless unless it betters a sizable portion of society, especially in a country as profoundly poor as India.

It is unfortunate that America, China and India have conflicts; in a sense, like the Germans and English of the turn of the last century, the three powers are fairly complementary, yet they don't get along. China and America are both equally oblivious to how the rest of the world sees them. China has heavy industry, the US has innovative power, and India has a young multilingual society. Ideally, these countries are complementary, and we have seen how the US-Chinese relationship has preserved high levels of consumption out here and high levels of growth there. But with the recession, this is increasingly difficult. China gets scorned for its currency manipulation, India gets scorned for having poor, hard working people (and to a lesser extent China too gets blamed for that).

As a result, it's hard for Obama or anyone else to reach out without getting burned politically; luckily, with its democracy, the average American attitude to India is more forgiving, but does this extend to economic relations in these troubled times, for instance on the issue of immigration? Can Obama go to India, where millions are desperate to immigrate to the US, and tell them that the doors are shut? Can he come back home and tell Americans that they will have to compete with harder-working, poorer foreigners who speak a 'strange' language and worship 'weird' gods?

Reading the articles here on FP by the Indian writers, one can easily get a sense that the Indian are more than envious of the foreign investments which China receives from rest of the world. It seems that the Indians are having trouble understanding just why the world would choose to put their money on China rather than India when to them India just seems to be so much better.

Companies invest in foreign countries for two reasons: Outsourcing and Market expansion. Both India and China are third world countries made up of mostly of poor people, and both are eyeing foreign investments as key to their countries' success. Whereas investment in China are made because of both China's outsourcing capabilities and its large consumer market, companies invest in India mostly for outsourcing only. Until India develops an infrastructure ready for mass consumption, and its people are actually willing to buy foreign products en mass, I think foreign investments in India will always be less than that of China's.

obama already upset India by not supporting for permenant seat in u.n security council.obama pours billions of dollars in pakistan and blame india for unemployment.You should look up on yourselves to your problem dont blame others for your problem it will not help You.India has many poor to look after we are not here to help u.s who go on war throughout world waste money

I have to disagree with a portion of Mr. Pangariya's implied thrust (at least as I read it), specifically the policy provisions. If his intent on policy is otherwise...I apologize.

If there is one thing the global financial crisis has taught us, much by illuminating the growing multi-decade income inequality and evisceration of the middle class in the US and to some degree in Europe, the standard policy prescriptions of liberalization of labour laws and privatization may not benefit the average worker. No doubt, India does need reforms in these and other areas, but details matter.

There is little sense in India blindly pursuing American style labour laws or undertaking privatization of the entirety of public sector holdings, for what is the point of growth if you end up where you started - with a few plutocrats and aristocrats and the rest as [debt] serfs?

For labour market models there may be better examples to be taken from Europe and elsewhere, including for the related areas of pensions, health and other social services. On the privatization/regulation front, neither the US or Europe serves as good examples, and Indian might look internally at what has worked, what could be improved and assembling an entirely new model there. There's likely very good candidates for privatization, but perhaps there is good reason for the Indian government to keep a strong foothold in the banking sector.

And on subsidies, no doubt there are inefficiencies and many should be on the chopping block. But this does not have to mean that the development model and the development goal is not focussed strongly on improving the lives of the poor, the near poor and middle class. Even if this means giving up 1%-2% points on growth (and I''m not convinced such policies would hurt growth), better to have the vast majority share in the fruits of development from the start.

I have to disagree with a portion of Mr. Pangariya's implied thrust (at least as I read it), specifically the policy provisions. If his intent on policy is otherwise...I apologize.

If there is one thing the global financial crisis has taught us, much by illuminating the growing multi-decade income inequality and evisceration of the middle class in the US and to some degree in Europe, the standard policy prescriptions of liberalization of labour laws and privatization may not benefit the average worker. No doubt, India does need reforms in these and other areas, but details matter.

There is little sense in India blindly pursuing American style labour laws or undertaking privatization of the entirety of public sector holdings, for what is the point of growth if you end up where you started - with a few plutocrats and aristocrats and the rest as [debt] serfs?

For labour market models there may be better examples to be taken from Europe and elsewhere, including for the related areas of pensions, health and other social services. On the privatization/regulation front, neither the US or Europe serves as good examples, and Indian might look internally at what has worked, what could be improved and assembling an entirely new model there. There's likely very good candidates for privatization, but perhaps there is good reason for the Indian government to keep a strong foothold in the banking sector.

And on subsidies, no doubt there are inefficiencies and many should be on the chopping block. But this does not have to mean that the development model and the development goal is not focussed strongly on improving the lives of the poor, the near poor and middle class. Even if this means giving up 1%-2% points on growth (and I''m not convinced such policies would hurt growth), better to have the vast majority share in the fruits of development from the start.

I have to disagree with a portion of Mr. Pangariya's implied thrust (at least as I read it), specifically the policy provisions. If his intent on policy is otherwise...I apologize.

If there is one thing the global financial crisis has taught us, much by illuminating the growing multi-decade income inequality and evisceration of the middle class in the US and to some degree in Europe, the standard policy prescriptions of liberalization of labour laws and privatization may not benefit the average worker. No doubt, India does need reforms in these and other areas, but details matter.

There is little sense in India blindly pursuing American style labour laws or undertaking privatization of the entirety of public sector holdings, for what is the point of growth if you end up where you started - with a few plutocrats and aristocrats and the rest as [debt] serfs?

For labour market models there may be better examples to be taken from Europe and elsewhere, including for the related areas of pensions, health and other social services. On the privatization/regulation front, neither the US or Europe serves as good examples, and Indian might look internally at what has worked, what could be improved and assembling an entirely new model there. There's likely very good candidates for privatization, but perhaps there is good reason for the Indian government to keep a strong foothold in the banking sector.

And on subsidies, no doubt there are inefficiencies and many should be on the chopping block. But this does not have to mean that the development model and the development goal is not focussed strongly on improving the lives of the poor, the near poor and middle class. Even if this means giving up 1%-2% points on growth (and I''m not convinced such policies would hurt growth), better to have the vast majority share in the fruits of development from the start.

http://trivcap.wordpress.com

Great article but a couple of items mentioned are incorrect...

1) India is NOT a democracy. Contrary to popular belief, the people who vote, mostly rural poor, are coerced or bribed by local thugs cum politicians. In 2009, India ranked 3.3 out of 10 on Transparency International's rankings (with 10 being the most transparent, 1 the least). And the prime minister is commonly heard calling himself a "fireman". Hardly the conditions of a democracy.

2) The assertion that India has a "fiercely independent press and judiciary and growing oversight by NGOs," is completely wrong. Any journalist will tell you that it's common to receive bribes from local politicians and businessmen that influence the publication of more favorable stories. Furthermore, any lawyer will tell you that "face law" is a common practice in India, whereby older, more experienced lawyers have only to show their face to the judge and the case, no matter what the circumstances, will be ruled in their favor.

Luckily this is starting to change. There have been a few debates recently about how to ensure media is less persuaded by kickbacks and favors. For the first time this year, a media bribery case involving a Mumbai politician received a huge public outcry. And in the most recent elections of 2009, there was a sudden push to inform voters of the issues and candidates on the ballots, led by an independent commission. However, it must be noted that India has a LONG way to go before safely calling itself a democracy.