I don't understand the Indian economy. I do, however, have nine questions on the Indian economy:
>(1) If relatively small reforms in the past decade and a half moving
>economic policies a few steps in a neoliberal direction have doubled
>the growth rate of Indian productivity, why was Indian growth so
>slow under the British Raj's largely classical policies back before
>1947? (Roy seems to propose a four-part explanation: (i) extremely
>low net savings rates, (ii) next to no financial system to channel
>capital from savers to investors, (iii) astonishingly low rates of
>schooling, (iv) immense burdens from the rapid population growth
>produced by a delayed demographic transition, and (v) barriers to
>entrepreneurship, adjustment, and knowledge transmission produced by
>caste in the broadest possible sense--the most important barrier of
>which divided the Britain-born segment of the Ksatriya from the rest
>of the India-resident population.)
>
>(2) The failure of state governments within India to imitate
>policies adopted by their neighbors that have proved successful.
>Kerala sticks out like a healthy thumb along many dimensions. I
>would think that in any election-based political system the campaign
>slogan "they did it in Kerala, we can do it here if only we throw
>the rascals out" would be unstoppable.
>
>(3) How to divide the acceleration of growth in the 1980s, before
>the exchange rate crisis, into (i) beneficial effects of minor
>reforms that nevertheless raised potential output by improving
>(static) efficiency, (ii) beneficial effects of minor reforms that
>made it possible to greatly increase the efficiency of investment,
>and (iii) unsustainable increases in production above potential
>output that were the source of macroeconomic instability.
>
>(4) The causes of the extraordinary divergence in state-level
>reforms in the 1990s.
>
>(5) Whether India's pre-1990 performance should be taken as par for
>the course--about normal for a "developing" country, or whether
>India had sufficient unique advantages in 1947--political democracy,
>a large upper class literate in the world's leading technical
>language of English, effective rule of law, a competent civil
>service, and so forth--that its growth should have exploded
>thereafter, and only policies that turned out to be an order of
>magnitude more malign than those usually found could hold it back.
>
>(6) Is it appropriate to call one of the leading currents in Indian
>politics today "fascism with an Indian face"--if fascism can be used
>as an analytical term rather than a term of abuse. Specifically, if
>one goes back to the foundation of European fascism around World War
>I, one finds:
>
> --a glorification of the ethno-nation
> --a belief that the ethno-nation will realize its glorious
>destiny only if
> it has strong leaders to follow
> --contempt for the redistributive politics of parliaments dominated by
> interest groups.
> --contempt for the "cretinism of parliaments" in general
> --a belief that the ethno-nation not only should, but must
>band together
> because it has powerful enemies.
>
>There is (or used to be) a strand in the political science
>literature that blamed the growth of this current of political
>thought in Europe on the stresses produced by rapid urbanization and
>industrialization--as all that's solid melts into air, an assertion
>of group identity with the ethno-nation and a search for a leader to
>make sense of it all becomes overwhelming.
>
>(7) Given the extraordinary and visible benefits of the past decade
>or so of reform, how is it that the pace of reform remains so slow?
>I mean, where is the Coase theorem when you really need it?
>
>(8) A deeper question: Europeans with state-of-the-art ships appear
>off the seas of India in the first quarter of the sixteenth century.
>Mongol-Turks with state-of-the-art firearms and tactics cross the
>Indus in the first quarter of the sixteenth century as well. At that
>moment the relative race for technology and organization between the
>European and the Muslim ekumenoi hangs in the balance: Mehmet II
>does, after all, employ the world's largest and most advanced cannon
>in the conquest of Constantinople in 1453. For the folllowing two
>centuries--until perhaps 1650--the Ottomans are regularly able to
>muster and supply armies and fleets that are larger and at least as
>technologically advanced and well-disciplined as their Spanish,
>Italian, Hungarian, and German adversaries.
>
>Babur's army and tactics overwhelm Delhi Sultanate armies from five
>to ten times their size, and at a time when the Portuguese are
>barely able to hold on to Goa the Mughal Empire secures the entire
>Indo-Gangetic plain. Yet in spite of their (largely) alien religion
>and (largely) alien language, the Mughal cadres seem to leave little
>lasting impact. And two centuries later, as the struggle of the
>Mughal diadochi for the corpse of the Empire begins, it is armies
>trained by Europeans that have the advantage in organization,
>supply, and discipline, and that seem able to defeat enemy armies
>five to ten times their size...
>
>Why the failure to keep up--indeed, why the loss--of Mughal
>social-organizational-capability?
>
>(9) A naive macroeconomist looking at India's low tax yield and
>extremely high fiscal deficit would be really, really worried. If
>growth halts (for any reason) for three years, it seems likely to
>produce a loss of confidence, large scale capital flight, and a
>potential fiscal disaster of Argentine proportions. And if it then
>turns out that any substantial share of financial institutions or
>industrial corporations have debts that are effectively denominated
>in dollars, euros, yen, or pounds, then pandemonium... Would a
>not-naive macroeconomist who knows something about Indian
>institutions be really, really worried about the current situation
>too?