Those who follow my exploits know I dance Bollywood, so it is not surprising that this news clip would catch my interest:

Indian newspapers have been gushing about the incoming governor of the central bank, Raghuram Rajan, in terms usually reserved for Bollywood film stars: his trim physique, his long-distance running, even his “rather photogenic appeal,” as The Mumbai Mirror tabloid wrote this week.

Why would a central banker get such an enthusiastic media reception? It seems that while the world’s eyes are on Syria and the Middle East, the subcontinent has been undergoing significant economic reversals. For example, the value of the rupee has slid to the point that late last week the prime minister publicly attempted to calm fears:

India’s prime minister, Manmohan Singh, has made a rare speech in parliament in an attempt to restore investors’ confidence in the Indian economy and halt the slide of the rupee.

Singh, an economist credited with leading a crucial wave of reforms in the early 1990s but recently widely criticised for inactivity, said India was not facing a repeat of a balance of payments crisis that shook the country in 1991 and said fears that economic growth could slip to as low as 3% were unfounded.

The American Interest editor Walter Russel Mead explains why this story should command far more news attention than it is currently getting.

What’s so important about India’s economic problems? It’s more what they tell us about the state of the country than the severity of the problems themselves. The stock market jitters, the currency crash, the GDP slowdown and the government deficit aren’t enough in themselves to sink India. All economies go through rough patches every now and then, but the question isn’t about a downturn. The question is whether the Indian political system has what it takes to get the economy back on track.

Two horrible things happened in India this week: an inept government reeling from serial corruption scandals and mounting evidence of economic failure pushed two bad bills towards enactment. There’s a wasteful “food security law” that will do much more to nourish India’s rich world of government corruption than to help the poor on a sustainable basis, and a poorly designed “land reform” law that could be even more crippling.

As Mead points out, Indian economic health impacts the happiness and economic security of billions of people, which is extremely significant to the prospects for world peace. The best path towards prosperity is a free market system that encourages industrialization, and the proposed reforms take the opposite direction.

A recent Canto Talk discussion featured India. History expert Barry Jacobsen pointed out that despite both its large population and economy, the nation took a very insular approach to foreign affairs by paying more attention to Pakistan than China, Russia or the United States.

In fact, if really smart diplomacy on America’s part were implemented, a partnership with a successfully industrializing India would be a great counterweight to China.

And while smart diplomacy from our country may have to wait a while, smart money is on paying attention to what India’s new central banker may be able to accomplish.