With China’s status as the “workshop of the world” marred by rising political risks, slowing growth, and increasingly untenable “zero COVID” policies, no country seems more poised to benefit than India. In May, The Economist ran a cover story about India, asking whether this was the country’s moment—and concluded that yes, it probably was. More recently, Stanford economist and Nobel laureate Michael Spence declared that “India is the outstanding performer now,” noting that the country “remains the most preferred investment destination.” And in November, Chetan Ahya, Morgan Stanley’s chief Asia economist, predicted that the Indian economy will account for one-fifth of global growth over the next decade.
Without a doubt, India could be on the cusp of a historic boom—if it manages to increase private investment, including by attracting large numbers of global firms from China. But will New Delhi be able to seize this opportunity? The answer is not obvious. Back in 2021, we provided a sobering assessment of India’s prospects in Foreign Affairs. We pointed out that popular assumptions about a booming economy were inaccurate. In fact, the country’s economic rise had faltered after the 2008 global financial crisis and stalled completely after 2018. And we argued that the reason for this slowdown lay deep in India’s economic framework: its emphasis on self-reliance and the defects in its policymaking process—“software bugs,” as we called them.
