Modernising Doesn’t Mean Westernising in Emerging Markets

On 24 July 1991, Manmohan Singh, then India’s finance minister, appeared before Parliament to deliver what has been called “the most far-reaching and important budget speech” in the nation’s modern history. In response to an unprecedented financial crisis, Singh laid out a reformist vision designed to free the Indian economy from the government’s grip and kickstart the maturation of the Indian financial sector.

As his speech wound down, Singh made his far-reaching ambitions clear: “As Victor Hugo once said, ‘No power on Earth can stop an idea whose time has come.’ I suggest that the emergence of India as a major economic power in the world happens to be one such idea.” Despite imperfect execution and the nation’s many lingering problems, the effects of Indian economic liberalisation have been as sweeping as Singh’s rhetoric promised. By 2011, India’s GDP had nearly quintupled, per capita income quadrupled, and household savings increased by more than 12 times.

The nation’s economic landscape has completely changed since 1991, but has its economic image? Has India’s transition to a mature market economy meant development along specifically Western lines, or do local factors continue to have a hand in shaping its economic growth? This question has serious implications for not only India but also the many Asian countries currently making a similar transition.

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Modernising Doesn’t Mean Westernising in Emerging Markets