Once a Close Economic Rival of China, India Falls Behind

[Yoshie Furuhashi]

It's ironic that capitalism's last hope may be China under the Communist Party....

***** NYT November 29, 2002

Once a Close Economic Rival of China, India Falls Behind

By KEITH BRADSHER

SONEPAT, India - Raj K. Gupta, a partner in one of India's largest shoe manufacturers, makes a dreaded but necessary trip every two months to Hong Kong and then into Guangdong Province in southern China.

He goes to buy Chinese shoemaking machinery, because India has few producers of such machinery.

He goes to purchase Chinese synthetic leather, because India makes little of the material and most of that is of low quality.

He goes to visit Chinese shoe factories, to draw lessons from their enormous size, advanced technology and highly organized operations.

When he is done, after eating too much Chinese food, which he dislikes, he flies home and thinks about how India, despite democracy, has fallen behind China, a one-party state struggling with the aftermath of Communist economic policies.

"If we were more developed here I wouldn't have to go so much," he groused, sitting in his office, where incense burned in a corner before a group of paintings and statues of Hindu gods. "We should have that kind of technology, both for our international competitiveness and for our domestic market."

India's continued backwardness compared with its neighbor across the Himalayas has become a national obsession. The world's two most populous countries, China and India were close economic rivals just two decades ago, each struggling to bring progress to vast numbers of impoverished peasants.

But now China, by quickly converting much of its economy to an unfettered and even rapacious version of capitalism, has surged far ahead. The average Chinese citizen now earns $890 a year, compared with $460 for the typical Indian, according to the World Bank.

Only slightly more numerous than Indians these days, Chinese citizens now buy one-third more cars and light trucks each year, 3 times as many television sets and 12 times as many air conditioners. China has high-speed freeways, modern airports and highly efficient ports that are helping it dominate a growing number of manufacturing industries.

India's potholed roads, aging airports and clogged ports make exports difficult. China attracted as much foreign investment last month as India did all of last year.

Some blame India's lagging performance on the country's still stifling bureaucracy, although many market-limiting regulations have been lifted since New Delhi began dismantling its "license raj" in 1991.

Some blame the country's cultural and religious traditions, contending that a national thirst for economic equality may have stunted progress. Some even maintain that a democracy may be less able than an authoritarian government to promote growth in a poor country.

Like China, India has a growing middle class - it is just not growing as quickly, perhaps in part because India's expansion started in 1991, 13 years after China's.

The Chinese economy has been expanding by 8 to 10 percent a year for the last two decades, while India's has been growing at a still healthy 6 percent only for the last decade. India's population is growing twice as fast as China's, moreover, so income growth per person has been slower in India....

<http://www.nytimes.com/2002/11/29/international/asia/29INDI.html> *****
--
Yoshie

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