What has transpired since the Mumbai attacks in terms of diplomacy and responses seems to be following a well-worn script. India has clear evidence of Pakistani involvement. The US recognized this evidence and leaned on Pakistan to do something about the terrorists being trained within its borders. The United Nations also called for action. The Pakistanis have undertaken a symbolic response, placing a terrorist leader under house arrest and banning his organization. Meanwhile, the media and other parts of the power structure deny involvement in the attack or its preparation, blaming the Indians or Americans themselves.

India’s external affairs minister is keeping up the war of words. Luckily, there is no sign of a military response, which would be extremely risky and achieve little or nothing. The blatancy of Pakistani involvement this time also seems to have reduced American tendencies to link such events to the need for tackling the Kashmir issue. In fact, there is nothing the US or anyone else can do about Kashmir, so they are best off doing nothing—except perhaps exhorting the parties concerned to work things out directly. And those parties’ best approach is to preserve the territorial status quo and try for normalizing daily life and improving the quality and frequency of interactions across the de facto border.

Interestingly, the Babri Masjid destruction and the post-Godhra massacres seem to have featured in the motivation of the terrorists. There is a lesson here for certain extremists and jingoists within India. Besides violating human rights, their manipulative and even vicious actions have contributed to escalating and prolonging conflict internally and internationally. Unfortunately, viciousness can get confused with strength. The current government’s security failure makes it look even weaker than it has appeared so far. But it would be a terrible shame if it loses the general election because of the Mumbai attacks.

Military conflict might help the current government get re-elected, but the cost to the nation would be too great. In that case, the government may as well put aside electoral considerations and fix what it can in national security, both with respect to India’s borders, and inside the country. Already, and belatedly, an effective home minister has been appointed, and a comprehensive plan for overhauling internal and border security has been announced. How well it is implemented remains to be seen. One way to reduce lags in security improvement is to shut down the VIP culture which sucks up resources that should be used to protect the citizenry. More general structural improvements in security are a prime imperative for India.

There is some recognition in India that by attacking the upper middle class and elite, the terrorists received much more media attention, and triggered much greater outrage. Bombings that killed the masses did not have quite the same effect. The class galvanized in this manner may bring about some structural changes, hopefully in the direction of greater government accountability and standards of performance, but without sacrificing democratic freedoms. They can do this by participating more in government, by creating an agenda for developing civil society, which remains stunted in India, and by expanding their own ranks through promoting inclusive economic growth.

Ultimately, for India, living well will be the best revenge on the criminals who promote, plan and carry out terror attacks. Living well means striving for a prosperous and just society. India must have no more state-sponsored or state-condoned violence against its own citizens from any group. So living well means improving democracy and human rights in the country, not circumscribing them. Ultimately, living well must also mean putting India’s budding growth miracle on a firmer long-run footing. India has to show the Pakistani people what is possible in politics and economics, if that nation is to work towards a government that serves its interests better.

The terror attacks came at a particularly bad time for the economy, with the global economic news worsening daily. Clearly, improving security is now an economic policy as well. More conventional Indian economic policy responses have been encouraging. The fiscal stimulus that was announced recently includes a mix of increased spending and a variety of targeted tax cuts, tax credits and subsidies. A second round is in the works, and will also likely have tax breaks and subsidies for specific sectors. Gradual monetary easing continues, with interest rate cuts coming in the last round. Surprisingly, senior government officials are still raising fears of inflation, when a massive economic slowdown is a much greater threat. More rapid monetary easing is called for, in my opinion.

India is facing a different type of economic crisis than in 1991, but has a similar opportunity to introduce further economic reforms, particularly with respect to the financing and growth of Indian industry—this requires structural reforms that are already on the policy agenda, and desperately needed.

The strategic prize for India is still its tryst with destiny: prosperity along with democracy. That goal must not be derailed by 26/11.

Nirvikar Singh is a professor of economics at the University of California, Santa Cruz. Your comments are welcome at eyeonindia@livemint.com