In Spite of the Gods: India's Economic Transformation

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While all eyes are on China’s rise in the lead up to the 2008 Olympic Games and U.S. Presidential election, the Center for National Policy focused on the other rising Asian power - India. To that end, Edward Luce, Financial Times Washington bureau chief and author of In Spite of the Gods: The Strange Rise of Modern India, led a fascinating discussion on the economic and geopolitical rise of India and explored the impact it will have on the world.

Mr. Luce is well equipped to describe India’s remarkable and rapid rise. Having spent four years in New Delhi reporting for The Financial Times he is a first-hand witness to India’s astounding economic growth. He has observed its staggering challenges, including the inefficiency and corruption of the government, endemic poverty, the devastating number of H.I.V.-AIDS cases, and the daunting environmental challenges that come with India’s economic growth.

Indeed, it is India’s meteoric ascent that has led to changing perceptions of the country. Luce aptly noted that not so long ago India was intrinsically linked to Pakistan in the minds of most Americans. Currently, that linkage has dissolved only to be replaced by a new linkage with China in the psyche of the American populace. This shift has led to America engaging with India in new and unprecedented ways including a proposed nuclear deal, large scale war games and joint exercises, and proposals to provide India with a sizable percentage of the military hardware it plans to purchase with $40 billion over the next two or three years. Echoing the language of the National Intelligence Estimate, Luce describes India as the “global ‘swing state’ of the 21st century,” due to the perception that the country is caught between a hegemonic United States and a rising China.

According to Luce, if India is to maintain its growth it will have to confront several fundamental challenges; one in particular is the inefficiency and corruption of the government. Despite being a functioning and vibrant democracy, India’s hulking bureaucracy is one of the most corrupt in the world. In one shocking statistic Luce describes the northern state of Bihar, where up to 80 percent of government subsidized food is stolen from the intended recipients.

In spite of these challenges, Luce is an optimist who sees the “glass half full.” Assuming that the Indian government continues to enact reforms, Luce predicts a bright future for country. He does not see conflict with China as inevitable, yet points out that it is not inconceivable. This leads him to suggest that the triangular relationship between India, China, and the United States will be more important in the records of history than the war on Islamic extremism and thus should be more of a focal point of American attention and policy.

• The United States must continue to engage India on a range of issues including nuclear, economic, military and regional security in an effort to encourage India’s growth as a counter weight to China.


• As the 34th anniversary of the first Indian nuclear test approaches, the United States must weigh the benefits of the U.S.- India Nuclear Deal to the challenges it poses to the non-proliferation regime. If the deal is passed by all parties, the United States must work to ensure that India does not divert domestic sources of nuclear fuel to its nuclear weapons program.


• The United States must keep China in mind when dealing with India. This is a triangular relationship with a high degree of complexity. The critical goal should be helping to engineer a peaceful rise, with both China and India becoming fully integrated into the current international system.