Anniversaries are good stock-taking occasions to reflect on progress, celebrate successes, acknowledge setbacks, outline a vision and a roadmap. Monday was the 75th anniversary of India’s independence. It’s a bittersweet story of the glass being half full or half empty, depending on one’s predisposition to optimism or pessimism.

The optimistic take would be titled ‘Against all odds’. Start with the vicious brutality of partition itself, the biggest mass migration of people in a concentrated timeframe in history. Between one and two million people were killed and 15 million crossed borders to escape mass atrocities and begin afresh among co-religionists. Many also left, then and subsequently, for the safety of Britain. Several of their stories are told in Kavita Puri’s poignant and sometimes harrowing Partition Voices: Untold British Stories which I have reviewed at http://www.internationalaffairs.org.au/australianoutlook/reading-room-partition-voices/

Despite this inauspicious start, pervasive poverty and illiteracy, independence leaders put their faith in liberal democracy. The experience of the horrors of sectarian massacres deepened their conviction about the virtue (as a matter of principle) and wisdom (as a matter of political prudence) of secularism, to ensure that tens of millions of Muslims continued to feel as much at home as people of any other faith.

This is under challenge today from the fusion of religion and nationalism by the Modi government. India’s territorial integrity and political independence face no serious threat. The tension between ethno-national identity and national integration has been reconciled in a complex yet adaptable system of power sharing. The widening circle of democratic participation has brought large numbers of previously excluded social groups into mainstream politics.

The constitution adopted in 1950 borrowed ideas, organising principles and institutions from American, British and French traditions and adapted them to India’s unique circumstances. It’s a tribute to their remarkable foresight that although at any given moment India’s politics seem utterly chaotic, dangerously volatile and totally unpredictable, the basic constitutional structure, with federalism added to democracy and secularism, is essentially intact and thriving. Indians, by nature argumentative as Nobel laureate Amartya Sen has argued, have taken to democratic contestation with gusto, as best captured in the saying: ‘Give me four Indians and I will give you five political parties’.

The positive parts of the British legacy include judicial, police, military and civil services, underpinned by the rule of law. They introduced, instilled and progressively expanded the principles and institutions of representative government, including a widening circle of Indians inducted into public offices. The most consequential negative legacy was deindustrialisation in the service of the colonial centre. In the half century before independence, India’s GDP per capita grew at the miserly annual rate of 0.2 per cent, compared to an average of 2.9 per cent since 1950.

Still, Britain cannot be held responsible for the sad reality that 75 years after independence, India has the world’s largest pool of poor, illiterate and sick people. The social ills of malnutrition, hunger and child labour remain distressingly common. In a pathology becoming depressingly familiar in Western countries, the democratic process accentuated the divide between the qualities needed to capture power and the skills required to exercise it wisely for all. Public policy, captured by special interest groups, often loses sight of the national interest. Caste-based preferential policies, meant to reduce and eliminate social and economic disparities, created and nurtured vested interests instead. As the government framed public policy in a caste-conscious way, every affirmative action produced an equal and opposite reaction. Caste and religion-based identity politics have become more deeply entrenched than ever. (Did you know India’s was the first major government to ban The Satanic Verses in 1988, despite Salman Rushdie being Indian-born?). The politicised corruption of institutions has accelerated with Modi but began much earlier, including unleashing investigative and prosecutorial agencies against him along the lines we have witnessed against Donald Trump in the US.

If colonisation left India with an underdeveloped economy and market institutions, the fascination with the Soviet model after independence meant that imperfect markets were pushed aside in favour of worse-performing public sector industries. The state told industrialists what, where and how much to produce. Imports, foreign exchange and many prices were controlled. Banks and insurance companies were nationalised. Scarcities arose, quality suffered and prices rose. Policy failures were reflected in a falling share of world output and exports and a depreciating currency. Dirigisme created and nurtured organised interests in an unholy alliance of bribe-seeking and influence-peddling politicians, bureaucrats, industrialists, trade unionists and large landlords.

The spur to economic reforms in 1991 was a major balance of payments crisis that became an opportunity to revamp policy. But its beneficial impact has eroded with the loss of reform momentum over the past decade. India’s GDP/capita is only half, one-fifth, one-sixth and one-twentieth that of Indonesia, China, world and industrialised country averages, respectively. The public sector is still large, subject to bureaucratic and political interference, and infects many parts of the economy.

Wary investors fear political paralysis, labour market rigidity, protracted litigation, land acquisition problems, layers of red tape, the high economic cost of state subsidies and third world infrastructure compared to East and Southeast Asia. Foreign investment is stuck well below the levels necessary to power an efficient and internationally competitive economy, sustain rapid growth and absorb the millions of youth entering the labour market each year.

Prime Minister Modi caved to domestic sectoral and bureaucratic protectionist resistance and pulled out of the Regional Comprehensive Economic Partnership in 2019 that would have imposed external disciplines to drive efficiency and productivity. Indians once again joke that the economy grows mainly at night when the machinery of government is asleep at the wheel. Still, India retains significant competitive advantages of political stability, a moderately sound financial system, a self-sufficient consumer base, a young population, a large professional class, an education system with established links to the English-speaking world, a well-developed system of property rights and commercial law, a mostly independent judiciary and a relatively free press.