The hare-tortoise myth2 min read . Updated: 27 Aug 2010, 07:06 PM IST
The hare-tortoise myth
The hare-tortoise myth
Super Power | Raghav Bahl
The twin stories of India and China are the most dramatic in the world economy. In 1820, the two countries contributed to nearly half of the world’s income. In 1950, their share was less than a tenth; and currently the two contribute a fifth. By 2025, their share of world income will be a third, according to projections. Both remain the world’s fastest growing big economies.
China, of course, hogs most of the glory. India was ahead of China in 1870, as well as in the 1970s, in terms of per capita income levels at international prices. But since 1990, China has surged ahead of India—China’s per capita income growth in the past two decades has been at least double India’s rate. It has invested nearly half its GDP, a scale of capital investment—mostly in building world-class infrastructure—that is unprecedented in the world’s economic history.
So the title of Raghav Bahl’s book Super Power? The Amazing Race between China’s Hare and India’s Tortoise, is a bit fey. Is there really a race? Is India even interested in playing catch up? Does China even need to look over its shoulder for a bounding India? Or is this phantasmagorical race purely the spin of feel-good entrepreneurs, phoney management gurus and an uncritical, gung-ho media?
Is China defying conventional economic wisdom by hyper-investing without creating any major economic bubbles that we know of? Ergo, is it rewriting the rules of economics? Is China using “ambition and infallible execution" to trump democracy? Will Chinese companies, most of them owned by the state, rule the world? Only the future will tell.
India has indisputable strengths. Half of its GDP is consumed by over a billion people, it has a fairly robust rural economy, large household savings, a flourishing private economy, healthy foreign exchange reserves, low bad loans, and a prudent and sage central bank. It holds first-rate elections, which are the envy of even the developed world.
That is where the good news begins to end. Decades of—and continuing—low investment in education and health and a poor food delivery system have led to a huge mass of poor, illiterate and hungry people. The much-hyped and hoped for demographic dividend could easily turn out to be a liability, with millions of semi-literate, untrained, angry young men and women on the streets unable to find work in the growing formal economy. Public debt is worrisomely high. India has a working democracy, but a dysfunctional state. The state promises a lot and continues to deliver little, and most of it fairly badly. There is very little exploration of the core issues which threaten the promise of a truly New India.
For all of China’s faults and frailties, it manages to educate and feed over a billion people, which India can’t. This is a national shame and disgrace. So let’s be realistic. With trade between the two countries touching $60 billion (around Rs2.8 trillion) every year, India and China can only try to benefit from each other more. What is the potential of, and impediments, to such cooperation? That’s not a sexy story to tell, but it’s a more original one.
Soutik Biswas is the India editor of BBC News online.
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