Can India change the world?

Is India the world’s next tiger economy, poised to succeed a slowing China as a pillar of the global economy? That wouldn’t be anything new, simply a recovery of its traditional position. One economic historian estimates that as recently as 1700, India accounted for about 24 percent of global G.D.P., similar to the share now of the United States or Europe. But today India makes up just 3 percent of global G.D.P., up from 1 percent in 1993. As India overtakes China as the most populous country in the world, and as international companies seek new bases for manufacturing outside China, India has a historic opportunity to recover its mojo in a way that would change the world.

But can this lumbering giant of a nation actually pull that off? Some experts are optimistic. “I fully believe this can be not just India’s decade, but also India’s century,” Bob Sternfels, the global managing partner of McKinsey & Company, told me — from Mumbai, which he was visiting. And Morgan Stanley, the investment bank, says that India is on track “for unprecedented economic growth” that will allow it to leapfrog Japan and Germany to become the world’s third-biggest economy by 2027. I’m not quite that confident in India’s future, but I do believe it has a fighting chance to soar economically — if it faces up to three major challenges: It needs to improve education, boost women in the labor force and improve the business climate to increase manufacturing.

Let’s start with education, which should be an Indian national embarrassment. National surveys confirm that even when Indian children go to school, they don’t necessarily learn much. Fewer than half of fifth graders can read a text at a second-grade level. China has thrived in part because it made enormous investments in human capital — transforming what in the early 1980s had been a broken education system — and that created a literate, numerate work force. In contrast, India isn’t even in the ballpark. Figures vary, but perhaps only 35 percent of Indian children make it to grades 11 and 12. One gauge of the broader human capital challenge in India: Some 35 percent of children are physically stunted from malnutrition, higher than in much poorer African countries like Somalia and Burkina Faso. It’s difficult to nurture a modern, educated work force when so many children are badly malnourished, for this can also impair brain development and cognitive bandwidth.

But wait! Maybe there’s hope. In the 41 years that I’ve been visiting India, I’ve seen tremendous improvements in education and well-being.

Teacher absenteeism used to be routine, and in Bihar State I once came across a school that opened only once a year, for exams, which teachers then filled out so that it would look as if students were learning. All that is much rarer today, and the authorities in some states have eliminated book fees, uniform fees and other informal charges that were a barrier to school attendance. Free hot lunches and deworming are now routine, and it’s rare to find young children who are completely outside the school system.

Beyond improving education, India also has to offer opportunities for educated women in the economy. The East Asian economic boom rested on very different economic models. South Korea’s path looked nothing like Taiwan’s, and China’s was different from Malaysia’s. But one common thread was that these countries prospered in part by educating village girls and then moving these educated women into the urban labor force, hugely expanding their country’s productivity. Bangladesh has done something similar.

India in contrast squanders the talent of the female half of its population, at least in economic terms. Only 23 percent of Indian women are in the labor force — compared with 61 percent in China and 56 percent in the United States — and in India female labor force participation has actually been dropping for most of the past two decades.

While health and education obstacles affect all children, they are often particularly acute for girls because of age-old discriminatory attitudes.

“Many girls are still underfed, malnourished, and suffer from stunting and anemia,” noted Ruchira Gupta, founder of an anti-trafficking organization called Apne Aap. “They don’t have access to secondary schools, and young women don’t have enough access to universities, training programs and most of all, to jobs in the formal sector.”

On top of educating its children better and empowering its women, India also needs pro-growth economic policies. The government recognizes this and has taken some steps in that direction, and there’s also some healthy competition among the states for investors. Infrastructure has improved enormously and made it easier to do business. Airports once were a nightmare but now are smooth, fast and efficient: I would rather deal today with an average Indian airport than with an American one. As for the I.T. sector, it’s dazzling and in some respects ahead of the United States. Here in India, digital data on mobile phones is extremely cheap, and you can buy a mango from a street vendor with your phone. Digital transactions are everywhere, and people easily keep digital records securely on their phones.

Nandan Nilekani, a pioneer in information services, says that India’s digital public infrastructure enables a technology-led growth model, and there are indeed signs of a boom in entrepreneurial activity in the tech sector: India had 452 start-ups in 2016 and 84,000 last year. But it is export-led manufacturing that traditionally has provided the path for economic breakout in Asia because it can employ an enormous number of people. In India, manufacturing’s share of the economy has stagnated, and international executives share horror stories about red tape and the difficulty of doing business.

India has had false dawns before. For a while in the 2000s, it was enjoying economic growth rates of roughly 8 percent per year, and it seemed that it might become the next Asian tiger economy. In 2010, The Economist published a cover story, “How India’s Growth Will Outpace China’s.”

Today India has a new chance to lure manufacturers. China has an aging population, its brand is tarnished by repression, and global companies are eager to find new manufacturing bases. India has English speakers, a familiar legal system, low-cost workers and first-rate engineers emerging from the Indian Institutes of Technology.

If India can boost education, free its women to join the labor force and attract the companies that are desperate to find new bases for manufacturing, it can surprise us again. If it can do that, it will recover its historical role as an economic powerhouse, and the past few centuries of poverty will be forgotten — a blink of the eye in the context of India’s ancient civilization. It would again be normal to think of India as a great power and one of the pillars of the global economy, and that would change the world.