Sanjay Reddy in The Print:
Former Reserve Bank of India governor Raghuram Rajan was right to emphasise the idea that intolerance is also a threat to prosperity. For a period, India was branded as the world’s “fastest growing major economy”. This is a position which it has in recent years traded back and forth with China. But it was more securely the fastest growing large democracy, given that China was no competition there. This is not just a statement of political values, but also a signal to investors that in India, fissures, divisions, and tensions can and will be handled flexibly, providing the possibility of greater stability over the long run.
It is this aspect of India that has allowed it to maintain and consolidate a nation-state over seven decades. Indian capitalists may look at China with admiration, but its inability to guarantee that divisions within the country will be handled in a flexible way remains a source of doubts about its economic future. Political tensions may not have a first-order effect on economic outcomes in the short run but in the longer term, they create the possibility of potentially devastating disruptions, even if their likelihood is difficult or impossible to judge.