author is the
National Coordinator of Lok Satta movement and National Campaign
for Electoral Reforms)
One of the great topics of
public discussion in recent decades among all economists,
journalists, public policy enthusiasts and enlightened citizens
is the rapid growth of China. India - China comparison is
now the favourite pastime of economists. Both are emerging
as major economic powers. China has been growing at 9 percent
or more per annum, compared with India's more modest 6 percent
over the past two decades. This difference in growth means
that Chinese economy doubles itself every 8 years, whereas
it takes about 12 years for India! However, China and India
are now the third and fourth largest economies in the world
respectively in PPP terms.
Both countries started at roughly
the same level of per capita income in late 1970s, but now
China's income is close to $1000 per capita, as opposed to
about half of that in India. In 1980, both countries had about
the same level of exports, but now China's share in world
trade is almost four times that of India. That is the tyranny
of differentials in compounded growth rates! Given China's
stable population and India's population growth rate of 1.9%,
the disparities in per capita incomes only keeps mounting.
Clearly, we need to get our
act together in order to fulfill our potential, and successfully
compete with China in economic arena. But when we examine
the patterns of growth within both countries, things look
more interesting. The West and the South are the engines of
growth in India. The great North Indian states and the Eastern
region are falling behind. In China too, the South and East
- the provinces in and around the pacific rim - are the hubs
of growth. The vast Western region is still underdeveloped.
Like in India, the problem of migration of millions of peasants
to cities in search of work is a great challenge to the Chinese
state. Given the totalitarian system and firm control of the
government, the slums and abject poverty are not visible in
urban China. But regulation of migration could actually conceal
and complicate a long-term problem. Of course, the much talked
about Towns and Village Enterprises (TVEs) in China are easing
the pressures and generating new jobs in rural areas and small
towns. India needs to do a lot more to spur growth and promote
gainful employment in rural areas.
But the one big difference
regarding the regional disparities in both countries is striking.
About 93% of Chinese people live in the Eastern and Central
China. Both regions are growing rapidly, though sub-regional
growth rates vary. Economic stagnation is limited to less
than a tenth of the population. As opposed to that, Uttar
Pradesh, Bihar, Jharkhand, Madhya Pradesh, Orissa, Chattisgarh,
Rajasthan and the Northeast roughly account for half the population
of India, with exceptions like Western UP and the National
Capital Region of Rajasthan, are not able to join the growth
bandwagon. For instance, the per capita income of our richest
state, Maharashtra, is four times that of the poorest state,
Bihar, and this disparity is growing. What is worse, the population
share of these states is growing, even as their share of GDP
is declining. If only these states grow as fast as the West
and the South, we will have another Asian economic miracle
right here in India!
Take UP and Bihar, where governance
is in shambles. All parties which had a share in power over
the past 35 years have been guilty of gross incompetence,
misgovernance, breakdown in public order, and creaking infrastructure.
Clearly, a comprehensive national strategy and growth-oriented
policies are needed to help UP and Bihar overcome the obstacles
to rapid growth. But such political wisdom is hard to come
by. However, such an effort must be made, or else the whole
of India will lag behind in the race for development. If Bihar
and UP die, India dies too.
But clearing the political
mess in a fractious democracy takes time, great will and courageous
leadership. After decades of short-sighted approach, Indian
policy makers have made two important departures in the past
decade. First, there is a conscious effort to harness diplomatic
and geopolitical strengths for economic purposes. Second,
the look-East policy, and the urgency exhibited in integrating
with the Southeast Asian and Chinese economies are both welcome
and long overdue. But we must go beyond words, and aggressively
pursue our economic objectives to mutual advantage.
The 1360 km trilateral highway,
stretching from Moreh in Manipur to Mae Sot in Thailand through
Bagan in Myanmar, is one project which offers enormous opportunities.
This highway will strengthen trade links with all of Southeast
Asia. Once we have a road link to Burma and Thailand, there
will be direct access to Yunnan province of China. North and
Northeastern India will be linked to Southwest China. With
trade links established, and population moving much more freely
across this whole region, all countries will gain.
The Northeastern states, Eastern
UP, Bihar, Orissa and Chattisgarh can then be hubs of economic
activity, instead of being neglected backwaters. West Bengal
and Calcutta will gain enormously once Eastern region is integrated
with the booming Asian economies. The Northeast could become
a vibrant hub of economic activity and tourism, instead of
being the victim of corrupt regimes.
However, Bangladesh is slow
to recognise the benefits of such an Asian Highway, and is
reluctant to allow passage rights across its territory. But
that need not deter us. Once the highway is operational, Bangladesh
will comply and take advantage of the road links.
China is growing with astonishing
rapidity precisely because the Chinese act with alacrity once
they make up their mind. Strategic aims, economic policies
and infrastructure links must be synchronized to fulfill our
potential. The UPA government and NDA opposition have a lot
to gain if they act swiftly to establish road links with Thailand
and Yunnan province of China. Prosperity and job creation
would replace insurgency in Northeast. Marxists benefit much
if West Bengal becomes an economic powerhouse under their
stewardship. Laloo Yadav and Mulayam can at last show prosperity
to Bihar and Eastern U.P. Economic growth will force political
reform and promote better governance in Bihar and UP. India
can shake off its slumber and be counted among the Asian tigers
and combat mass poverty.
For this dream to be a reality,
we need to overcome old prejudices and obsession with national
" security" in traditional terms. Our policy makers
and strategic thinkers must give us leadership and act quickly
and decisively before the window of opportunity closes.