Separating the realities of India from the stereotypes of outsiders

At last year's gathering of bigwigs at the World Economic Forum in Davos, Switzerland, attendees were subjected to a public relations blitz themed "India Everywhere." It was a fitting name, because everywhere you look, especially in business and geopolitics, it seems like India is the new next big thing. This was unimaginable a decade ago. Early last year model Padma Lakshmi graced the cover of Newsweek, hands folded in the traditional Hindu greeting, under the headline "The New India."

As India's stature grows, it's important to keep in mind that the "new" India is only a small fraction of the whole thing. This will be clear to those who have the pleasure of taking in Edward Luce's "In Spite of the Gods ," the most accessible and insightful survey of India since the country's geopolitical rise started gaining notice in the late 1990s. Luce, who covered south Asia for the Financial Times between 2001 and 2006 , looks at Indian society broadly, weaving reporting and reportage . Married to an Indian woman, he ably infuses his analysis with illustrative and often humorous personal anecdotes.

A functioning democracy in a poor, mind-bogglingly diverse, and populous country is an amazing accomplishment. Each successive Indian general election, notes Luce, is the largest democratic exercise in history. Still, this doesn't excuse the country's pathetic state of governance and the magnitude of Indian graft. Luce shows how the poor -- the rickshaw drivers, street vendors, and slum dwellers -- bear the brunt of a heavy-handed bureaucracy that subsidizes the rich in the name of the poor. One former Cabinet secretary explains to Luce: "Many people, especially foreigners, do not appreciate the extent of corruption in India. They think it is an additional nuisance to the system. What they do not realize is that in many respects and in many parts of India it is the system."

Luce surveys India's political landscape, explaining the rise of caste-based parties, the state of the Congress Party led by Sonia Gandhi, and the nature of Hindu nationalism. His analysis reveals the underpinnings of a deeply fragmented system, in which the need for consensus makes it extraordinarily difficult to reform -- almost the opposite of the Chinese decision-making system. Making matters worse, in Luce's wonderful formulation, India has "an impressive democracy that is peopled, for the most part, by unimpressive politicians." Indian parliamentarians have whittled the number of meeting days down to between 70 and 80 days a year (the US Congress meets for about 150 days a year). And the quality of discourse is low even by political standards .

It's no surprise, then, that the Indian state has failed to deliver, particularly on education, infrastructure, and public health -- vital aspects of developing countries' growth and well-being. The outsourcing and information technology industries cannot save the day; they employ only about 1 million in a total workforce of around 470 million. As Fareed Zakaria wrote in the aforementioned issue of Newsweek, "The country might have several Silicon Valleys, but it also has three Nigerias within it, more than 300 million people living on less than a dollar a day."

Only 35 million Indians work in the formal economy, 21 million of those for the government. The rest work off the books and pay no taxes. Stringent laws that prohibit firing of employees prevent firms from hiring workers in the first place. A 2005 law passed unanimously in parliament promises 100 days of manual labor in the countryside to any Indian who wants it, for a maximum of $2 a day. The law may cost India up to 2 percent of its gross domestic product, and after 100 days the workers will still have no new skills. It's just one example among many populism-driven policy disasters.

Despite the numerous bearish signals, Luce is cautiously optimistic about India's future. "India is not on autopilot to greatness," says Luce. He argues that overcoming the big challenges, such as AIDS and climate change, first requires India's political-bureaucratic elites -- the folks he spent the good part of five years interviewing -- to drop their complacency and "premature spirit of triumphalism." New Delhi displayed this spirit in 2004, when its excessive pride led it to turn down foreign aid in the wake of the December 2004 tsunami, even as it sent aid to other countries affected.

Luce's optimism is based largely on the fact that he sees a limited downside and a very high potential upside. India is so big and so diverse, he argues, that instability has a very small domino effect -- events in one part of India cannot bring down the whole country. More important, democracy allows angry groups to vent their frustrations at the ballot box. Thus, he reasons, the painfully slow and steady improvement of Indian development indicators will be hard to derail, even if the state doesn't get its act fully together.

Jai Singh is a writer based in Washington, D.C.