Jessica Seddon was Director of the Center for Development Finance at the Institute for Financial Management and Research in Chennai, India. She is currently a Fellow at the Council on Foreign Relations and senior advisor to the Indian Institute for Human Settlements.
Geologists have an evocative term for majestic landscapes prone to tectonic shifts: catastrophic landscapes. India is in many ways similar: the economy is reaching new heights, but the forces playing out not so far beneath the surface have the potential to suddenly alter the terrain.
India has built up substantial momentum, but on a creaky substratum of weak infrastructure and poor services. The country's failure to deliver the public goods its policymakers promise and its constitution guarantees undercuts one of its greatest economic assets: its human resources. More importantly, the political-bureaucratic strata that shape this foundation for sustained growth are like molten lava: slow-moving, but occasionally explosive. Electoral pressure on leaders to perform is building as existing practices of making and implementing policy come under increasingly critical scrutiny. The combination led to some unpleasant surprises in the fall of 2010 and may well produce more if India does not move rapidly toward systemic reform that encourages greater transparency, accountability, and capability at all levels of government.
Economic prospects are often measured in terms of progress on particular policy changes: labor market reform, budgetary allocations to education and health sectors, financial sector reform, or rationalization of tax codes. This is the wrong calculus for predicting India's trajectory. The next set of economic reforms has to be political. It must consist of revamping the state's ability as an organization to deliver on the infrastructure, services, and policy context its citizens demand.