On one side of the argument are those who believe markets should drive development. There should be free trade, stable inflation and minimal government intervention.
On the other side of the argument are those who say that LDC's have not got the capital needed to provide the infrastructure that markets need (roads, power, education and health services for example). Therefore governments must take the lead by providing this.
But a third position takes this argument further. LDC's don't have the experienced entrepreneurs and necessary business skills to allow markets to allow development at the desired rate. Further they argue that the distribution of income that markets would cause will be far too unequal and this also requires intervention. In short the view is that the government must be responsible for the development process and most parts of the economy.
India is a country that has largely taken the third view. Indian industries are heavily subsidised, measures to even out the distribution of income are significant and prices are controlled. This has worked quite well for India, although their advantage as English speakers cannot be understated.
However now the policy is reaching its limits. The widespread involvement of government has stifled private enterprise, prevented the development of some industries and led to a corruption that diverts well intended funds from worthwhile projects.
So the time has come to reform and 'get the prices right' to allow India to unlock its potential. It's not going to be easy.
