"Despite the headlines, India is doing rather well. Its economy is expected to expand by 8.5 percent," the magazine says in its latest cover story, referring to the bad press the country received ahead of the Oct 3-14 Commonwealth Games.
"It has a long way to go before it is as rich as China - the Chinese economy is four times bigger - but its growth rate could overtake China's by 2013, if not before," the magazine says.
"Some economists think India will grow faster than any other large country over the next 25 years. Rapid growth in a country of 1.2 billion people is exciting, to put it mildly," it adds in the article: "How India's growth will outpace China's." The magazine says horrible toilets, stagnant puddles buzzing with dengue-spreading mosquitoes, collapsing masonry, and lax security and a terrorist attack did not fetch India ahead of the Games, suggesting it may remain a "second-rate" power.
"Or does it?" the magazine asks, saying the first reason for its conclusion is the benefit Indian economy will derive from its "demographic dividend" that has powered many of Asia's economic miracles.
"India is now blessed with a young and growing workforce. Its dependency ratio - the proportion of children and old people to working-age adults - is one of the best in the world and will remain so for a generation," it says.
The second reason, the magazine says, is the much-derided democracy, despite the notion elected governments retard development in poor countries, are biased towards interest groups and indulge in endless debates and delays on even the most urgent matters.
"No doubt a strong central government would have given India a less chaotic Commonwealth games, but there is more to life than badminton and rhythmic gymnastics. India's state may be weak, but its private companies are strong."
The magazine says Indian capitalism is driven by millions of entrepreneurs furiously doing ahead with this task, and thriving small businesses with many world-class ones whose English-speaking bosses network confidently with the global elite.
"They are less dependent on state patronage than Chinese firms and often more innovative: They have pioneered the $2,000 car, ultra-cheap heart operation and some novel ways to make management more responsive to customers," the magazine says.
"Ideas flow easily around India, since it lacks China's culture of secrecy and censorship. That, plus China's rampant piracy, is why knowledge-based industries such as software love India but shun the middle kingdom," it says.
"India's individualistic brand of capitalism may also be more robust than China's state-directed sort," the magazine adds, but also warns against unemployable workforce and rickety infrastructure.
Yet there is hope. "The Indian government recognises the need to tackle infrastructure crisis, and is getting better at persuading private firms to stump up the capital. But the process is slow and infected with corruption," it says.
"Given the choice between doing business in China or India, most foreign investors would probably pick China," The Economist said. "But as the global economy becomes more knowledge-intensive, India's advantage will grow."