Viewpoint: India Isn't Shining; The media is interpreting last week's election as a defeat for reform. In truth, the country needs more of it, not less.(Cover Story)

Byline: Ruchir Sharma, Sharma is cohead of global emerging markets for Morgan Stanley Investment Management

India's intelligentsia missed the story through much of the recently concluded national-election campaign. And if the postmortem following one of the biggest political upsets in India's 52-year electoral history is any guide, it seems they may be off-base once again.

Opinion makers were mesmerized by the ruling Bharatiya Janata Party's "India Shining" message, which declared that India's economy was on track to join China's as a bona fide Asian miracle. In the last quarter GDP had risen faster than any country's in the world, including China's; foreign-exchange reserves were piling up. The party was cast as the proponent of aggressive reform. Yet the rosy numbers were driven more by a boom in global emerging markets and a good monsoon than by any substantive policy decisions. Now many in the media are interpreting the BJP's drubbing as a defeat for reform, once again ignoring facts.

During former prime minister Atal Bihari Vajpayee's five-year term, economic growth averaged 5.7 percent. That may have been enough to impress India's vocal plutocrats, but obviously not the voting majority. That level of economic expansion translates into per capita income growth of only 4 percent, reduces poverty by just 0.6 percent a year and doesn't create anywhere near enough new jobs. In a country where per capita income is a mere $500, far stronger growth is needed to meet the rising aspirations of a populace now exposed to global images of affluence through satellite television and other media.

Despite all the talk of era-defining reforms, India's per capita income growth rate has been stuck at 4 percent since 1980. By comparison, East Asian boom countries like Japan and Taiwan achieved per capita income growth of 8 percent for 20 to 25 years at a stretch. After years of gradual reform, India ...