Indian economy is growing at a fast rate these days. Now, many Indians dream of having a double digit economic growth just like that of neighboring China. To do so, India needs to improve its infrastructure and take massive projects in this regard. However, it seems that India may not be able to surpass the high economic growth rate of China after all. This assessment has come from Minister for Science and Technology Kapil Sibal. He is now in China. I read an interesting report in Rediff.com titled ‘India can't grow at China's pace: Sibal’. After reading the report, I tried to make a list of the five reasons why Indian cannot match high economic growth of China.
- China is a communist country and the government is all in all in every decision making process. On the other hand, India is a democratic country and Indian decision makers have to be accountable to the voters. So, Indian government cannot act so fast like Chinese government and also Indian government cannot neglect any part of the country.
- Chinese government does not have to worry about elections and public reactions. That is why, they could take some massive infrastructure projects in some of the large cities. On the other hand, Indian government has to focus on the development of the rural areas too and thus cannot concentrate too much wealth in building world class infrastructure facilities in any particular city.
- Kapil Sibal viewed that China had become mainly an export oriented country where all the focus is increasing export. On the other hand, ‘India is a home-based consumption economy’. So reaching to the rural people is very important in India.
- In China, it is easy for the government to acquire land and displace people for any large project. In India, it may often get the government into complex legal process.
- Poverty, illiteracy and unemployment- these are the major problems for India. So, until India can address these problems first, it cannot hope to achieve the same level of high economic growth like China.
You may wonder if democracy is an obstacle for economic growth in India. I don’t think so. Mr. Sibal has rightly pointed out that India has the demographic advantage, “India, demographically young, has 547 million people who are less than 25 years of age. By 2030, India will have 80 per cent of the workforce.”
Well, the only catch is that a significant portion of these 547 million people are poor, illiterate and will remain unemployed.
What is your idea about this matter?
China has more tech. entreprenuers and there are a strong support from the government for it as well. Its completely missing in India. Early stage Tech. startups face an uphill battle in India.
Posted by: Rajiv | September 12, 2006 3:17 PM | Permalink to Comment