LONDON– By what yardstick does India wish to be measured as it celebrates this week (along with Pakistan) the 50th anniversary of independence as a sovereign country?

As the world’s largest functioning democracy it has clearly achieved renown and every day by example it lays low the lie that China is too big to be ruled any other way than by dictatorship. As a military power it has an unshakable superiority over all its neighbors, save China. And if India’s rulers remain wise, as they have been since prime minister Jawaharlal Nehru’s tragic mistake, not long after independence, to go to war with China over an unimportant peace of Himalayan real estate, that power equation need never again be put to the test. Moreover, with Pakistan, its estranged twin, at long last under civilian rule that is both democratic and sensible, now is the time to solve the Kashmir dispute and to forge a peace agreement that will commit both sides to rapid nuclear disarmament.

But the most important day-to-day yardstick of achievement is economic. Is India capable of becoming an economic superpower of the twenty-first century?

Like China it has all the potential, perhaps even a surer one because its legal and civic institutions are far better formed. The record of its first 50 years is impressive, yet at the same time flawed in one crucial aspect–its failure to lift its poor majority far enough off the floor so that they have hope of a decent future.

Nehru described India under British rule as “a servile state with its splendid strength caged up, hardly daring to breathe freely, governed by strangers from afar, her people poor beyond compare, short lived and incapable of resisting disease and epidemic.” Sworn in as India’s first prime minister in August, 1947, he called for “the ending of poverty and ignorance and disease and inequality of opportunity.” The man who won independence for India and Pakistan with his non-violent campaigns of passive resistance, Mohandas Gandhi, said then that India would “only truly become independent when its poorest were free of human suffering and poverty.”

E.M. Forster, the celebrated author of the great colonial novel, “Passage to India,” described the country as “swelling here, shrinking there, like some low, but indestructible form of life.” But a look at recently published facts and figures in the United Nations Human Development Report suggests that, despite the magnitude of today’s problems, the late Mr. Forster wouldn’t recognize the India of today:

* Food and Nutrition: Between 1951 and 1995 food grain production increased four fold and famines, once a recurrent plague of Biblical proportions, have been virtually eliminated.

* Education: Between 1961 and 1991 literacy more than doubled.

* Health: Between 1961 and 1992 life expectancy doubled to 61 years and infant mortality was more than halved.

* Safe water: More than 90% of the population now have access to safe drinking water.

* Income poverty: Rural poverty has declined from 51% of the population in 1977 to 39% in 1993 and urban poverty from 40% to 30%.

For a continent getting round for a billion people such progress ends up affecting a big slice of humanity. Still, the poverty remains deep, the early vision unrealized and the future uncertain. 53% of children under the age of four–60 million of them–are undernourished. 61% of females over the age of seven are illiterate. Each year there are over 2 million infant deaths, most of them avoidable.

India’s future hangs partly on its economics and partly on its politics. While no one believes that India will return to the dark, Fabian days of its “Hindu growth rate,” a mere 1.2% annual growth, that marked its first three decades of independence, the question now is can it liberalize further so that it can up its present 6% or 7% to 8% or 9% a year? Even now India is one of the top three countries of the world, only beaten by China and the U.S., in a new index, devised by the World Economic Forum, that combines growth prospects with economic size. The game for the next twenty-five years is to seize China’s second place.

The politics, however, will determine whether the poor will share in this golden future. Part of India has already shown what can be done. Four states, Andhra Pradesh, Maryana, Kerala and Punjab in recent years have reduced their income poverty by an astonishing 50%. If all of India had Kerala’s birth and child death rates there would be 1.5 million fewer infant deaths each year and a quite dramatic reduction in population growth.

India, tomorrow’s could-be giant, has to decide its future. Wise decisions could insure a stunning success that would leave China envious and America open-mouthed. But a lack of confidence in the political arena, leading to botched economic and social decisions and to increased tension, war, with Pakistan, would throw this promise to the wind.