India's Ambassador to the U.S. Siddarth Shankar Ray highlighted the achievements and difficulties of his country's economic liberalization program in a speech at the Kennedy School yesterday.
Ray cited increased U.S. investment in India in the last four years as a reflection of the success of the liberalization program.
According to Ray, U.S. investment in India in 1993 alone equaled the entire investment that the U.S. made in India from its independence in 1947 until 1992.
While he explained India's commitment to economic reform, he said the nation's policy makers had to proceed with caution if they were to take into account the interests of India's many socio-economic and ethnic groups.
He said that because of India's commitment to democracy, India cannot proceed with economic liberalization at a very fast rate.
Ray said he was concerned that policy-makers not overlook the interests of the 400 million people in India who are in transition between the lower and middle classes. This segment of the population is potentially the most volatile, according to Ray.
The Key to a successful reform program is keeping the population informed of the need for economic liberalization, Ray said.
This task is particularly difficult for Indian policy makers because the immediate payoffs from liberalization are felt only by the middle and upper classes.
Ray made deliberate comparisons with China in his speech. He stressed that unlike China, India is a stable democracy, and hence provides a safer climate for investment.
Ray also highlighted a major shift in the Indian political arena. He said that politics in India are now more focused at the regional level compared to the period before 1985.
Ray said that since the 1970s, the political system in India has proved itself conducive to allowing new parties to emerge, which has resulted in coalition governments.
Also speaking at yesterday's event was Warburg Professor of Economics Emeritus and former U.S. ambassador to India John Kenneth Galbraith and former U.S. ambassador to India William Clark, Jr.
Galbraith introduced both Ray and Clark. Clark delivered a short address focussing on the historical development of the Indian economic liberalization process.