Recent interest in nineteenth-century European colonialism as a model for promoting state-building and development in parts of the contemporary Third World has rehabilitated the idea of imperialism. Proponents of this imperialism as state-building idea have pointed to the British Raj in India as proof of empire’s positive legacy. But the latest historical research does not support this view of the Raj as an agent of centralization, economic development, and secularism. Current research suggests that, if anything, the British promoted the “traditionalization” of India, halting many of the indigenous impulses toward modernization present in the late eighteenth century. Moreover, this legacy continues to play itself out in the political and economic problems of contemporary South Asia. In particular, the legacy of the colonial tendency to rigidify and, in some cases to create, a set of fragmented and competitive group identities has seriously impeded the achievement of an integrated state, full liberal democracy, and a successful economy. These problems were neither the result of specific conditions in India, nor of mere policy errors by the British, but are the likely consequence of any imperial relationship, making imperialism an inappropriate model for even the best-intentioned contemporary state-builder.