Indian Prime Minister Manmohan Singh spoke to the country on television last week, amid national protests over unexpectedly bold economic reforms his government had just announced. A coalition partner has defected, leaving Singh without a majority in Parliament, so the prospects for his proposals aren't good.

"If we have to go down," he's reported to have said, "we have to go down fighting."

The truth is, Singh no longer had much to lose. He could have surrendered to paralysis. That would have meant worsening economic underperformance, erasing altogether his faded reputation as India's chief modernizer. Or he could start and probably lose a fight to put the economy back on the high-growth track he first mapped out.

Unlikely as he is to succeed, choosing this battle was his best bet, and India's as well.

As finance minister in the early 1990s, Singh was the main architect of India's breakthrough reforms. Before that first "big bang," India was the most micromanaged democracy in the world. Bicycle manufacturers needed the government's permission to use a different kind of tire. When I visited the Planning Commission in New Delhiback then, officials proudly showed me the input-output tables they used, so they thought, to direct the economy down to the last bicycle spoke. Imagine Soviet-style central planning run by the British civil service.

Phenomenal Results

In economic terms, the dismantling of the so-called License Raj was an event on the same scale as Gorbachev's perestroika, though less dramatic because it didn't require a political revolution. The results were phenomenal. The fiscal crisis that had sparked the reforms was brought under control. The traditional Hindu rate of growth -- call it 4 percent a year, assuming a fair monsoon -- was replaced by an East Asian pace of expansion. Entrepreneurs appeared from nowhere and built world- class businesses. Poverty retreated faster over the next decade and a half than at any time in the country's history.

David Fuller's view Clive Crook has a good understanding of India and its many economic challenges. If our Indian subscribers and the many others within India who visit this site on occasion agree, I hope you will distribute his column to your friends, colleagues, clients and politicians. You can easily copy it or just use the 'Email this Item' link shown just over today's date above.

Fullermoney often says, Governance Is Everything. This is particularly true of India. Prime Minister Manmohan Singh and his Finance Minister Palaniappan Chidambaram, with their recent, decisive and 'nothing-to-lose' measures, have succeeded in changing perceptions among international investors from India's glass is half-empty to half-full once again.

However, their task is not easy, as Clive Crook points out:

Despite the proven success of the big bang, economic reform in India is still like pulling teeth. The changes Singh's government has again taken up -- having tried and failed to push most of them through before -- shouldn't be controversial. But they are.

And:

The supposedly pro-business Bharatiya Janata Party speaks for small retailers, and sees an opportunity to bring down Singh's now-depleted Congress-led government. And Sitaram Yechury, leader of the opposition Communist Party of India (Marxist), was quoted by the Financial Times as saying, "Congress wants Indians to be slaves and foreigners to be our masters."

Additionally, some of the emotional responses in the 'Comments' section beneath Clive Crook's article provide further insights regarding the challenge of modernising India's economy and lifting more of its vast, young population out of poverty in the process.

Meanwhile, India's stock market (weekly & daily) has had a good run recently and its push above the February highs bodes well for the medium-term outlook. However, it is temporarily overbought and susceptible to a reaction and consolidation in line with the global trend for stock markets. (See also related comments on 21st and 17th September.)

This article from the South China Morning Post: Manmohan Singh faces fight for India reforms, sheds further light on the Prime Minister's challenge.