Fortune has an excellent article on the messy state of Indian economic liberalization:

China’s economic miracle was achieved by getting the basics right–building good roads, educating women and young girls, loosening labor restrictions, and opening the economy to competition and foreign trade.

India, by contrast, is the global economy’s idiot savant. It excels at the impossible, turning out hundreds of thou-sands of brilliant engineers a year. Its software houses manage complex data across thousands of miles of undersea cable for the world’s most sophisticated clients. India has world-class business leaders and, unlike China, solvent banks. And yet India flubs the obvious stuff. The national roadway network is a shambles and the power grid even worse. Nearly a third of India’s population–and more than half its women–can’t read or write. India has moved grudgingly to lower tariffs and balked at turning money-losing state-owned enterprises over to the private sector. Red tape and corruption discourage foreign investment, as do restrictions on how firms deploy workers.

This bipolar development model is reflected in the crazy-quilt of wealth and squalor in cities like Mumbai, where billboards touting Mallya’s Kingfisher beer and Standard Chartered Bank’s investment-planning experts tower above sprawling slums, and urchins approach cars at gridlocked intersections hawking copies of Harvard Business Review. In Bangalore, executives visiting the immaculate campuses of software firms like Infosys and Wipro marvel that while their data can travel to the other side of the earth at the speed of thought, they must crawl along in bumper-to-bumper traffic for more than an hour to get back to their hotels.