With the sixtieth anniversary of independence, enthusiasm for India in the West is at an all-time high. And though the Hindu nationalist slogan “India Shining” was decisively and derisively dismissed as overoptimistic in India itself at the 2004 general election, among Western commentators the sub-continent’s sparkle remains untarnished. India seems to be the nation of the future – a vibrant, democratic, multicultural and increasingly free-market alternative to the grimly uniform authoritarianism of China. India seems finally to have fulfilled the dream of its chief architect, Nehru, who predicted that, once freed from the British Raj, the new nation would become a free, democratic and developed state – the global embodiment of “the spirit of the age”.

And yet journalistic optimism has not been reflected in the decisions of hardheaded Western businessmen, who continue to prefer India’s nominally communist neighbour, China. Despite a recent upturn in foreign investment, India still receives only a fraction of China’s share. Business has good reason to be cautious. For while the rise of India’s high-tech and software industries strikes fear among the West’s white-collar workers, in reality a bare 3 per cent of the population speak good English and 30 per cent are illiterate. India’s electricity consumption is but one third of the world average; and only 2 per cent of its roads are four-lane highways.

Western businessmen are not the only ones making unfavourable comparisons. Indians themselves are haunted by success of their Chinese neighbour. In the 1960s they fretted about not being as good at socialism, now they fear they aren’t as good at capitalism either. Indian commentators are rather divided on how to respond – unsure whether to beat them or join them. The ranks of Indian pop-economists urging the tiger to roar at the dragon, or the tortoise to sprint past the hare, are matched by those dreaming of a new global entity – Chindia. The partnership of China’s awesome manufacturing power with India’s enviable IT and services sector would make Chindia the factory and back-office of the world. The problem with this scenario is that China is beating India in the services sector, too.

For India’s more sober policymakers, emulation rather than partnership or head-on competition is the preferred response. In Nehru’s time, teams of bureaucrats crossed the border to study collectivisation. Now it is a phalanx of CEOs who descend to analyse management style and productivity gains. The Government, too, is keen to copy the Chinese. But efforts to promote foreign investment are being obstructed by an unlikely coalition of Maoist peasants, neo-Gandhian middle-class eco-warriors and a finance minister fretful at the loss in tax revenues. So, despite the frothy headlines, India’s economy, in comparison with that of its dragon of a neighbour, remains a lumbering, if frisky, elephant.

What lies behind India’s relatively disappointing performance? Some blame Gandhi and his Luddite ruralism; others castigate Nehru for the lost decades of planning, and everyone cites pervasive corruption. But none of these is convincing. Gandhi is the patron saint of India, not its chief economist; the legacy of Nehru was not all bad; and if corruption inhibited growth then China would still be in the Dark Ages. The truth is that India’s problems are not so much economic as political.

This is not, as was once fashionably asserted, because India is a democracy, while China is authoritarian. Democracy is not necessarily an obstacle to rapid economic development, as the reconstruction of Japan and Germany testify. The problem is not democracy, but how it is practised. And here the British must take a bow. For along with railways and the English language, the British also left behind a legacy of profoundly politicised identity politics. And India’s multiple caste, linguistic and religious communities continue to see themselves as bitter competitors for the largesse of the State, not as collaborators.

Sadly India’s politicians have often found themselves unable, and sometimes unwilling, to tackle this fractiousness. Caste divisions can become electoral constituencies and in consequence, Indian governments have found it difficult to establish any sense of common national purpose – and with it the willingness to pay the taxes necessary for education and infrastructural spending.

Indeed, the corrupt and often violent recent history of Indian democracy, with its far-right Hindu nationalists, panoply of caste and regional parties and unstable coalitions, springs from the same source as its sluggish economic reform: deeply entrenched social and political fragmentation.

But will India always remain the tortoise-elephant to China's dragon-hare? If India could transcend its fractious politics (and there are signs in recent elections that it might), then it certainly has the potential to excel economically. It has a demographic advantage over China – it will have a larger working-age population by 2050. Its diversity is also a source of creativity – something its dour northern neighbour fears it may lack. And while China’s rulers have managed economic liberalisation masterfully, it remains to be seen whether they can achieve the same miracle in the political sphere. China has enjoyed the short-term bonus of authoritarianism – the power to impose restructuring regardless of popular opinion – but authoritarianism also brings a lack of transparency. Many commentators believe this has shrouded serious overinvestment, bad debts and potential asset bubbles.

Moreover, China – unlike India – has not been effective at managing its gross regional inequalities. Few doubt that China’s economic triumph will eventually bring political turmoil in its wake.

India, unlike China, has had 60 years of experience in managing political turmoil. Though there are pockets of extreme radicalism, Maoist factions and Islamist extremism, mass revolutionary violence is highly unlikely; people accept the mediation of political conflict through elections. And so, paradoxically, though India's political life is chaotic, it is also curiously stable. India’s elephantine advantages may yet win out.

Maria Misra is a Fellow of Keble College, Oxford, and author of Vishnu's Crowded Temple: India Since the Great Rebellion

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