India and China Sail in Different Boats
By Shailendra Kakani
21 Aug 2006 at 11:17 AM EDT
BOMBAY (Commodity Research Group) -- After my last article "All rotten eggs for Bernanke?" I was inundated with emails. Some accused that I was some sort of Neo Macaulayite or a die-hard fascist who was intent on smearing the good image of India. Some sympathized with the plight of Indians and said they were sorry that such a great country was in the grip of such lousy politicians. Some India bashers said they understood the situation of Indians better and would be careful in their criticism of Indians. But most were surprised that India was so mismanaged and badly governed; they said they had been listening only the good things about this country.
This is not their fault. Of late India has been clubbed with China, particularly in the Western press. Whenever there has been a talk of resurging economies on this planet, the reference immediately doled out is that of China and India. Be it the question of commodity price rise or the global commodity demand and supply equations, the two countries are quoted in the same vein. But the fact remains that the two of them are as different as chalk and cheese. While China has truely achieved phenomenal level of material success, the same is not the case with India.
Measured in terms of purchasing power parity, China now ranks as the second largest economy in the world while India trails at number four. Compared directly, Chinese economy is already three times larger than the Indian one. China has seven times more Internet users and ten times more mobile phone users. While China has a trade surplus amounting to $200 billion with the USA alone, India's entire external trade amounts to the same figure. While China is registering trade surplus every year, India's trade deficits are growing to disastrous levels. And most importantly, Inflation in China is almost zero while in India even the government figures put it at 5+%, while the public estimates are anywhere above ten per cent.
Economic statistics apart, India is groaning under a level of poverty hitherto unseen in the world. More than 200 million Indians live in slums and shanties bereft of any sanitation facilities. Millions of school students don't see a teacher for weeks. More than 70 million children stay out of the school and work as child labour, often in very hazardous industries. By a former Prime Minister's own admission "269 million Indians are food insecure." In case the statement doesn't ring the bells, it is worth noticing that there are millions who don't get more than one meal, there are millions who share a meal in their family by turns(one meal for every member by turn), and there are millions who don't know what it is to have a meal, for they eat nothing more than boiled rice with nothing more than a pinch of salt.
Health of a new born is one indicator of human development, and India again under performs. While in China only 10% children under five are born underweight, in India 's score is 53% - far higher than Mexico's 8% and Pakistan's 26%. The UN MMR numbers for India (540) are several times higher than those for other developing countries like China (56), Brazil (260), Thailand (44), Mexico (83) or even Sri Lanka (92). India has far lower percentage of antenatal coverage (60%) compared to China. According to a study by Arati Rao "In India only 43% of deliveries involve a skilled birth attendant compared to between 86% and 99% in Mexico, China, Sri Lanka, Brazil and Thailand." Not surprising why China scores 0.718 on the human development index and why India clocks in a measly 0.571.
Fifty years back both countries were agriculture based economies. Today agriculture scene is different in both the nations. While Indian politicians ignored every sector of the economy, Deng Xiaoping focused on four vital areas to rejuvenate the Chinese state - industry, military, science & technology, and most importantly, the agriculture. He dissolved rural communes, infused new farming methods, allowed leasing of land by peasants, and permitted marketing of the produce. The results are for everybody to see: China now produces over 450 million tonnes of food grains, while India continues to struggle to maintain 200 million ton record achieved a couple of years back.
While Chinese farm production is rising, the agriculture output in India is stagnant since last three years. This can't be otherwise; a mere 21% of all farms in India have access to irrigation; remaining depend on rain gods to eke out one single crop. Farmers are crying because they are being supplied with rotten seeds, spurious insecticides, and last but not the least, no information. Though the country has hundreds of agriculture universities, there is a total disconnect between the agriculture scientists and the farming community; the farmers don't know what to do about a new pest attack, which crops to sow in case of monsoon failure, and where to go to seek information regarding proper application of fertilisers.
Reasons enough while the farmers in China are singing all the way to the bank, their Indian counterparts are committing suicide in despair. During last five years more than fifteen thousand farmers have either consumed insecticides or jumped in a well or tied a rope around their neck due to farming becoming unprofitable.
This is not a happy state of affairs; farmers are the backbone of any nation, they provide the food to the masses. How farmers are important can be seen from the huge subsidies the Western countries dole out to them. Happy farmers can do wonders for the economy of a nation; while China is set to become net wheat exporter this year, India is getting ready to import upto 3.5 million tonnes of the same stuff.
The same dismal performance marks Indian industries. Writing a couple of years back Jay Dubashi, one of India's leading economists, described the situation: "The industrial slump has affected everybody. If some companies have done well, it is because even in a slump, some companies manage to do well. But by and large, the industrial scenario is depressing."
According to him "In the Thane-Belapur industrial belt (a prominent industrial zone near Mumbai), every other factory is closed. Company after company, including such big names like Siemens, Philips, Guest Keen Williams and British Oxygen is laying off people." He further adds "Fifteen years ago, the textile mills of Bombay employed 250,000 millhands. Now they employ less than 30,000."
The industrial rot is not limited to one particular segment; sector after sector is experiencing the same thing. Take for example something as simple as locks. For decades a non-descript town called Aligarh in Northern India produced locks of all shapes and sizes. However the import of Chinese locks knocked the Aligarh locks which were too heavy, too ungainly. Today the town wears a ghostly look.
The same fate befell on Bhiwandi, a town just a couple of miles out of Mumbai. Till a decade and a half back this town produced suitings and shirtings by tonnes, however its weavers could not cope with the cheap imports, as a result looms after looms folded up. The change was so swift that workshops sold their perfectly working machinery at the rate of scrap.
I am mentioning of all these examples simply to highlight the fact that how the Chinese manufactury is outperforming the Indian one. I don't think there is any industry or any sector in China which has been devastated because of Indian imports or the superiority of Indian products. In fact there are many Indian businessmen who are going to China and opening their factories over there to take advantage of cheap Chinese labour and fantastic infrastructure. There are so many Indian books which are being published in China, there are so many Indian bulk drugs and chemicals which are produced by Indian businessmen in China and then shipped back to India. (Talk of the irony; these businessmen don't find labour in their own country where hundreds of thousands of people are dying out of hunger.)
The Western press is also highly impressed with Indian education, albeit wrongly. May be due to their exposure to Silicon Valley code writers, or to a couple of Indians professors working in American universities and corporations, Western journalists think too highly of India's forays in education field. Many have written glowing accounts of Indian Institutes of Technology or IITs. The fact is that the IITs produce barely 3,000 graduates a year, most of whom go abroad or join multinationals. However in their backdrop there are millions of children who don't see a blackboard in their life, there are millions who enroll in a school but drop out of it within five years, and there are millions who stay in the school but never see the face of the teacher.
Many journos eulogize India being the largest democracy in the world, however the fact is that the Indian legal system is far from perfect. Cases take decades to decide, allowing crooks to get away with their crime, and thus make a mockery of democracy. Hundreds of thousands of under-trails stay in jails simply because courts are too inefficient to bring their case to trial stage. Recently one man got out of jail after languishing in the jail for a solid 54 years - without a trial. The sad case was hilarious at the same time; neither the man nor the law-keepers knew what he was imprisoned for.
No wonder the common Indian dreads going to police, for he knows that the laws can be easily used as instruments of the powerful people to direct their actions. Police itself is notorious for torturing those who approach it for help. It has been often joked that if a woman went to the police station to complain of a rape, she stands the chance of being raped by the policemen.
On the other hand, in spite of there being authoritarian rule in China, the laws and the courts are able to protect individuals from exploitation of the powerful. There may be an unfortunate Tiananmen for two thousand Chinese once in two decades, but the humiliation and suffering millions of Indians go through daily is no better either.
China 's excessive authoritarianism and obsession with state power and control, along with its controlled media, may seem to be stifling settlement of contentious issues, but the fact remains that the system has been working wonders. It has brought prosperity to its citizen, it has kept them happy, and it has allowed them to have dignity of human beings - something often not available in India. No doubt there must be many problems in China as well - there is no Shangri-La in this world - but that doesn't mean the world must equate David with Goliath.
In the same breath I must clarify that it is true that there are some improvements in India during last decade and a half of India's tryst with globalization. It is true that financial liberalization has empowered consumers with access to housing loans, personal loans, credit cards and mutual funds, but for the majority there is nothing but rising prices, lowering standards and a miserable life. ATMs have revolutionized access to cash for a few rich, but for the majority cash has become a dream object. Computerization has improved the financial services for a few, but millions have simply lost their wealth altogether.
Even the most basic civic amenities are missing. A recent article in Economic Times quoted the latest Development Policy Review of the World Bank which says that the typical doctor at a primary health centre in Delhi is less competent than in Tanzania, and the chances of his recommending harmful treatment are 50:50. "One in five children drop out before class V. Teacher absenteeism is rampant, and half the Standard V children in five states cannot read Class II texts. Water supply is just four hours a day in Delhi, 2.5 in Bangalore and 1.5 in Chennai, against round-the-clock supply in Jakarta or Colombo. Electricity supply is terrible, and 30% of it is stolen with impunity."
You don't need World Bank reports to verify the situation. A casual drive through Mumbai (formerly known as Bombay) will describe the state of affairs. The so called financial capital of the country has thousands of people defecating along the roads while traffic creeps within three meters of them. Thousands of women get up before 4 AM to be able to relieve themselves without being noticed. Many women have testified that they often skip a meal simply because it would mean an extra trip to the toilet.
Though I have not been to China, I am sure even in their remotest village the scenes would be better than this. (In fact I have heard that when it comes to deal with human waste, the Chinese have been most enterprising; making farmyard manure out of the solid waste and enzymes out of the urine.)
What I wish to achieve by writing this article is simple: India and China cannot be - and should not be - clubbed together. They were in the same boat fifty years back; when India was just freed from the colonial rule and China was reconstructing after the Second World War. But as of today there is only one valid comparison among them: that the two have the largest populations to support. Apart from this there is nothing which forms a common denominator among the two nations. The way things are progressing in India, Bangalore will never become another Beijing and Bombay will never become another Shanghai. It is time the international media readjusts its perspective and present a more honest view to its readers.
This also means that during the coming decades while the Chinese commodity consumption may continue to rise, the Indian one may stagnate and may well fall. After all commodities are getting more expensive, and there will be a time only the highest bidders will be able to lay claim to them.
Copyright © 2006 Shailendra Kakani. All rights reserved.