India has always held great promise. Soon after independence, in 1947, its foreign reserves were among the world's largest, at $2.1 billion in 1950–51, and it accounted for 2.4 percent of global trade. Over the next 44 years, however, attempts to follow the Soviet model of self-sufficiency brought the country to the verge of bankruptcy. Domestic savings failed to keep pace with the investment needed to contain unemployment, especially as India's working-age population expanded. The crisis begged for drastic reform, and in 1991 the government delivered.

This reform program took its cue from China, which by 1991 had surpassed India on all major economic indicators. But in the shadow of the Chinese economic miracle, it is easy to overlook what India's reforms have accomplished during the past 14 years. A solid foundation for growth is now in place: the program of renewal, backed by successive governments, has increased the country's foreign reserves to an enviable $137 billion and raised annual economic growth from an average of around 4 percent in the four decades before reform to almost 7 percent today. Growth rates of 8 to 10 percent are within reach. The amount of foreign direct investment coming into the country,...