There are just two kinds of stories: ah, the wonder of it, and oh, the pity of it.

—Dero Saunders,

Forbes magazine.

For decades, the story of independent India has been a story of pity — the pity of her politics, her potential, her poverty. But in about 2003, India became a story of wonder — the wonder of her emergence, her brain power, her vibrancy.

Now it’s 2008, and we’re back to being a pity story. The reasons are much the same as before. We can’t, like the government in New Delhi, hope that India’s current woes will vanish when oil prices fall. We know it won’t. Because when India became a wonder story in 2003, it came off a decade of reform and adjustment. This time, we’re coming off four years of no reform, and there’s no safety net to support our fall. The global oil, food and liquidity crisis has exposed India’s flaws: a country with high everything - inflation, interest rates, real estate, talent costs, fuel and power costs, commodity prices, fiscal deficit. Who’d want to start a business in India today?

We’ve taken a little bit of reform and extended it beyond its life-span. Our entrepreneurs did so well on that that the world rushed to invest in Indian stock markets to tap their dynamism. But we’ve done what we can with virtual infrastructure — satellite, cellular, software. Now we need real infrastructure — real bridges and roads, teachers, medics, agricultural reform — not farm loan waivers, stop-gap rural employment schemes and damaging oil and fertilizer subsidies.

... contd.