“Singh introduced much reform, but in many critical areas he was constrained by the enduring socialist inclinations of his governmental coalition. Even today, firms with more than one hundred employees with few exceptions cannot fire anyone without government permission,” Greenspan writes. “Prime Minister Singh is a highly reputable reform-oriented economist, but he does not have the authoritarian clout that enabled Deng Xiaoping to start China’s agricultural reform in 1978. Indian democracy is up to this task. It needs only to focus on the urgent needs of India’s population. A very large dose of deregulation and competition can spread India’s IT revolution to the rest of the country.”

Greenspan admits that India has “great potential” and lauds its success in “export-oriented, world-class high-tech services” but adds: “...This kernel of modernity is only a small part of the sprawling economy of India. Even as tourism-associated service industries prosper, fully three-fifths of India’s workforce toil in unproductive agriculture.”

Greenspan buttresses this point. “ Total employment in India’s information technology industry is currently about 1.5 million, five times its level of 1999. Almost all the increase is export related. Another three million jobs have apparently been created in telecommunications, power, and construction as a consequence of the IT surge. Directly and indirectly, that’s barely 1 percent of total employment in India. And that’s the problem.”

“If farmworkers are encouraged to migrate to the more productive cities, as has happened in China, a level of agricultural output that feeds 1.1 billion people must be maintained. India’s ability to expand food imports is limited. Farm productivity growth is thus the only viable way to maintain food availability as manufacturing draws workers from rural India. Market competition in agriculture is badly needed,” he says.

... contd.