If capitalism has to work in developing economies, including India, it has to become more inclusive, it has to understand and deliver property rights to more people. That’s what Peruvian economist Hernando de Soto, adviser to 40 governments, told me last week as we discussed the future of capitalism in India. For this, he said, governments need to first study the laws that govern property rights and then change them so as to reflect their country-specific realities. The conversion of squatter rights to legal ones, for instance.

His argument, that that has been the case across the world and one that must be implemented sooner rather than later as the developing world, including China and India, joins the universal globalisation phenomenon, is compelling. Only a small percentage of people, around 20 per cent, in developing economies (no data available for India yet) practically function under the western system of legal rights, he said. The rest of the population functions like the way people in the US and Europe used to, as close as just hundred years ago, with informal or non-legal systems of rights.

But implementing and delivering clean property titles to the poor is a far cry, a very long-term idea that will get no political hearing today, particularly in a fractured polity like India’s. The task gets further complicated when nine out of India’s 10 land titles are under legal dispute in one form or another, as a McKinsey report notes. Take de Soto’s theory a little further and you’ll probably reach a conclusion that like the sub-head of his 2000 book The Mystery of Capital, capitalism may not be able to triumph in India. While the dreamer in me disagrees, my pragmatic side tells me that in some states the bridge towards that triumph is being built in the form of lower stamp duties.

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