Is India's economic juggernaut in danger of turning into a train wreck? Not so long ago, it seemed that the country's rise couldn't be stopped: the economy was expanding at nearly double-digit rates, and everyone from global shampoo manufacturers to Western think tanks was racing to put an India strategy in place.
But by the first three months of 2012, GDP growth had slowed to a nine-year low of 5.3 percent, its eighth straight quarterly decline. Now, scarcely a week passes without news of the rupee nose-diving to a new historic low against the dollar. In a report last month, credit rating agency Standard and Poor's warned that India risks losing its investment grade rating and becoming the first "fallen angel" among the four BRIC economies. This comes on the heels of a slew of warnings by pundits that India can no longer take economic success for granted. And it's not simply a question of riding out the current global slowdown. Flawed government priorities, poor fiscal management, and rampant corruption all threaten the inevitability of India's rise.
It may be too early to fundamentally reassess India's prospects. A young population, relatively high savings rate, and the lowest per capita income among the BRICs give the country the potential to return to the nearly double-digit growth rates it enjoyed until 2010. But if India's economic future remains uncertain, one thing is clear: along with the fate of 1.2 billion Indians, one man's reputation hangs in the balance. Will 79-year-old Prime Minister Manmohan Singh go down in history as the bold economic reformer who lifted India out of poverty? Or will he instead be remembered as a pithless technocrat whose government was, to borrow the assessment of historian Ramachandra Guha, "inept and incompetent beyond words."
For now, it looks like history will not judge Singh kindly. Over the course of his prime ministership, he has gone from being admired for being self-effacing and honest to being derided for his lack of courage and leadership skills. But now he's got a chance to prove what he's made of: On June 27, a day after taking direct charge of the economy following the finance minister's resignation to run for India's largely ceremonial presidency, Singh's office tweeted his intention to "revive the animal spirit in the country's economy." He has his work cut out for him, to put it mildly.
When the soft-spoken economist was sworn in as prime minister eight years ago, the outlook couldn't have been more different. Middle class Indians and foreign investors alike spoke of the new prime minister with admiration and affection. Outside India, Singh was best known as the finance minister responsible for India's 1991 economic reforms. By scrapping industrial licensing and slashing tariffs, he earned much of the credit for setting an autarkic backwater on the path toward becoming a major global economy. Not surprisingly, when Singh became prime minister in 2004, many observers expected him to deepen the reforms he had pioneered more than a decade earlier. That Singh, and not populist Congress Party President Sonia Gandhi, who had led the party to an upset victory over the right-of-center National Democratic Alliance government, was in charge signaled that India's commitment to reforms was irrevocable.
For the Indian middle class, Singh's symbolic appeal extended beyond his reformist turn as finance minister. How many children born in 1932 in a village in today's Pakistan with neither electricity nor running water ended up with a Ph.D. in economics from Oxford? In a nation of political princelings, whose constituencies are handed down like family heirlooms, the prime minister stood out as an advertisement for effort and intelligence. In a land of rabble rousers, where caste and religion remain the surest tickets to political power, the respected economist embodied quiet technocratic efficiency. And Singh's Sikh faith -- shared by only 2 percent of his compatriots -- showcased India's storied pluralism.
Burnishing the inspirational arc of Singh's life story was a reputation for personal probity acquired over a lifetime. The prime minister was seen by many as the sort of person who wouldn't offer an old friend a ride in his official car lest he waste government petrol. His family, the Achilles heel of many a Third World leader, maintained a similar sense of decorum. Instead of careening around town in bullet-proof SUVs, gun-toting guards in tow, or riding dodgy business deals to overnight millions, Singh's three daughters stayed out of the public eye. One of them is a history professor in Delhi; another is a little-known writer married to a civil servant; the third works for the American Civil Liberties Union in New York.
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