Why India can’t be the next China, and shouldn’t try
By Ruchir Sharma
When Narendra Modi became prime minister in 2014 one hope was that he would do for India what he had done as chief minister in the state of Gujarat: build a fast-growing economy like China’s, with an efficient bureaucracy and advanced factories attracting billions in investment from multinational corporations.
Five years later, with Modi seeking a second term in India’s general elections, it’s clear that he won’t make India the next China, because it’s not possible.
Comparing these two giants is a popular thought experiment, but they have nothing in common other than populations of a billion plus.
What Modi proved in Gujarat was that a strong leader can command change in India, but only one state at a time. In Modi’s first-term as chief minister between 2002 and 2007, Gujarat’s economy grew at a nearly 12 per cent a year pace, the fastest rate ever recorded in any major Indian state, under any chief minister.
As prime minister, Modi has been unable to generate the same kind of performance for the Indian economy as a whole; it has rumbled along at a rate of 6 to 7 per cent — far below the double-digit pace recorded by China in the 1990s, when it was at the same level of development as India today.
They freed rural Chinese to till their own land or leave the interior provinces in search of work. They created economic zones free of heavy bureaucratic control in coastal cities, where new jobs flourished.
India has never risked anything like mass firings and large-scale migration to promote growth, in large part because its democratic leaders fear voters would punish them for the short-term upheaval and pain. As a result, India has seen a much more gradual shift from rural to urban, farm to factory, state to private sector, than China has. Most Indians still live and work on the farm. The population is 70 per cent rural. Booming new cities are as rare in India as they are common in China. Many business sectors remain largely owned and operated by the inefficient state.
India has tinkered with free-market reforms, but only under pressure from economic crises, not as a steady long-term strategy like China. In his first term as prime minister, Modi continued on a path of gradual change, acceptable to the countless communities in India’s fractured electorate. He has for example pushed no broad privatisation, not even in the bloated state banks, which are a major obstacle to faster growth.
Already, one outcome of the 2019 election is entirely predictable, based on the party manifestos recently released by Modi and the main opposition parties. It will not lead to the easing of land acquisition laws or labour market rules, or the downsizing of state companies — the kinds of reforms that unleashed years of miracle growth in China, and in Korea, Japan and Taiwan before it. Instead, the manifestos offer dole-outs that will leave the overburdened state less money to invest in roads, ports and electricity plants.
The world’s most populous nations are evolving along very different paths. The contrast can be quite striking.
Consider how China created a cashless society by freeing its tech giants to create the software platforms that made it possible; within the last few years cash has virtually disappeared as a medium of exchange in big cities like Shanghai or Beijing. Modi tried to promote the same goal by state fiat; suddenly withdrawing all big bills overnight in late 2016. The result was not a sudden shift to digital forms of currency; it was a shortage of the old kind that is still weighing on the economy today.
Strong, centralised rule is particularly ill-suited to India, where many of the 29 states see themselves almost as separate countries. Whenever the prime ministers try to centralise more power in Delhi, as Indira Gandhi did in the 1970s, they have triggered a backlash, often led by state leaders.
India is more a continent than a country, its states more varied in language, culture and ethnicity than the nations of Europe. Its economy is best-managed one state at a time, by a democratic leader close to local conditions, not by an authoritarian regime at the Centre.
There is still reason to believe in India’s economic prospects, but hope won’t come from prime ministers in Delhi, it will come from dynamic chief ministers in state capitals. These figures often double as leaders of their own regional parties. Right now the conventional wisdom is that Modi and his party are likely to return to power but with fewer seats in the Parliament, which would leave him more dependent on regional leaders.
That would not be a bad outcome. India is better off accepting its exuberantly diverse and democratic nature, and giving its state leaders more authority to govern themselves, than trying to be the next China.
译文来源：三泰虎 http://www.santaihu.com/47522.html 译者：Joyceliu
Sorry for downvote. By mistake
India should not be China as India is today the largest consumer mraket of the world where as China burdened with 40 trillion dollars astounding debt seems to be destined to be a big fall in near future as the Chinese economy is highly inflationary in nature.India''s debt to GDP ratio is around 130 but in case of China it is 240.Some idiots may argue with a non issue like a issue but of no avail.
Are we lacking experts or we have gutless experts? Very difficult to say. The whole article is frivolous comparing India to China. Why is February 28th so important to India every year for the last 70 years, when idiot politicians come with their Santa Claus bags to parliament and pompously announce so called policy changes? Why India is so low in productivity, quality, creativity and innovation? Why do we produce millions of useless engineers who are not fit for any job leave alone engineering? Why farmers are so poor and need loan waiver year in and year out? Why middle men make all the money and farmers get next to nothing? Why no value addition at village level in agricultural produce creating more jobs, value and retention of money there itself? Why our products are drenched in pesticides which are banned outside our country? Why rice and wheat toast in the open without proper storage facility and FCI godowns are rented to beer companies? Why aren''t we inventing new machines for our own handicrafts and other industries and go on to produce much Superior products - glass Bangles, ceramic-ware (bone China kind of quality), silk sarees, brassware, silver filigree and many many more things? Why toxic money like bootlegging, havala etc. go into educational institutions, hospitals etc. to generate more toxic money? Why we should copy Western models that have failed - medical insurance,banking etc. Where are the experts?
How much of the famed Gujarat GDP was contributed by just one entity - the Jamnagar refinery ? Mr. Sharma won’t comment on that but happily repeats the propaganda on the “high GDP under Modi” even the refinery proceeds Modi.
It should be pointed out that the current scenario of non performing assets of public sector banks weighing down the economy is a direct result of nationalization of banks by India Gandhi, a Congress PM and the culture of political largesse to cronies in the form of unviable loans, a Congress legacy.
We are simply a diverse country , where each ethinicity dislike other ethinicity. Except sports we feel happy when other ethinicity goes down in whatsoever aspect. Then except Tatas and Adam Premji of Wipro all other business leaders have a mentality of Mediaeval ages, who look down their workers as nothing but slaves. In contrast look at the philanthropic nature of Jack Ma of Alibaba. Alibaba’s Jack Ma topped a list of China’s biggest philanthropists over the past year after share options he donated to his charitable trust amounted to $2.4 billion (Source - Fortune). In one aspect I fully agrre with you where you stated that for further Economic Progrees Each State should be given more power for more economic progress. Infact we should follow European Union, where they have common defence like Nato, common currency like Euro. If we run country like this for anther 20 years where there is acute unemployment, where Phd Degree holders are applying for class 4 jobs, then it''s condition may be like of Soviet Union with total breakup in future.
If india has the same gross public debt of China that is nearly 40 trillion dollars then maybe india can come close to China in gdp output but I am sure india does not want to become bankrupt trying to emulate China - let us be like the tortoise - slow and steady wins the race - let the Chinese hare wear itself out chasing its own tail
Is this an article about India or about Modi? Seems contradictory as it mentions only what Modi thinks and maybe has done
Wrong, wrong, Modiji will definitely take Bhaarat to glory and pride. The author says after Mao''s confusion, China started moving from 1970 onwards, it was not done in a jiffy. Of course, they simply hammered the people for achievements. Will you abide by anything like that here? No, and Modiji alone cannot do everything, people have to be the vehicles of progress, Om
Sonti Svln Sastry
definitely we over take china by a period of time
Prime Minister Modis dynamic Style will prove many critics wrong. He has often proved his Critics wrong. Nation needs a strong leader at top that Prime Minster Modi is . Prime Minster Modi shall have choice to choose & Select the Best team of Planners and decision makers Team. BJP team has to stand Shoulder to shoulder in International Gathering of Leaders. At equal Footing. Our Leaders should get Equal Status, A Warm Welcome while they Visit Foreign nations. Citizens of India too aspire to get better treatment when then go abroad. Therefore, BJP has a strong Reason to get-together for Nations Interest & lift the country
rather than all these comparisons, India needs to be focused to how to produce locally the goods it needs. small things put in right place, bigger things falls in place.
The author is giving a false analogy. China is never a comparison. India''s growth will be sustainable. So India is good where it is and in safe hands
Sidd The Way To Nightmare
Nmo is nothing but a chaiwala n economic s is very far from his reach..he can just a puppet of adani s n ambanis..
Only Modi can do it.Modi is the strongest leadership that we have got.
Generally Ruchir gives good info. But this one fails. He is probably afraid of naming the villains in India''s progress. As usual like any columnist, he has blamed the public financial institutions without advising govts (of all parties) to give them free hand to work on commercial lines AND THEN MAKE THEM ACCOUNTABLE. He has conveniently forgotten to name the private giant ICICI, Yes bank, Kotak bank and Axis bank. What are his suggestions for correcting the private sector? And dont forget that the private enterprises are the reasons for the NPAs of the PSBs. Come on Ruchir, be honest, realistic and impartial in your writings. Many people like me have respected you and followed your writings. But now I have to wonder whether you are worth following. Half info is more dangerous than no info.
鲁契尔说得很中肯。但这个比较他说的不对。他可能是不敢说出印度进步的罪魁祸首是谁吧。像任何专栏作家一样，他指责公共金融机构没有建议政府(所有党派)放手让它们从事商业活动，然后让它们承担责任。他忽略了私人巨头ICICI、Yes bank、Kotak bank和Axis bank。他对改进私企有什么建议？拜托，鲁契尔，你的文章要诚实，现实和公正。许多像我这样的人都尊重你，拜读你的文章。但现在我不得不怀疑你是否值得我们期待。50%准确的信息比没有信息更加危险。
Modi is a monster fraud who should be trashed immediately
Modi is rubbish
The logic of writer’s is not perfect. In gujarat he was alone n controll the opposition while in centre opposition party have no gujarati mind. They just oopose for the sake of no purpose.
jasdev singh sandhu
PM Modi cannot do it alone as Indian politics is full of vultures who want their own piece of flesh not only other parties but in BJP too.
Richie, Please don’t give obvious analysis with no insight.
Corrupt Nehru and Gandhi Family looting India for 60 years. Now Modiji working hard for development and safety of our country.
You cannot contain India in a box. It is a very varied, diverse, heterogeneous, independant organism. It will evolve by its self. Genetic tampering will have adverse effects. You can guide it but not force it.Let it bloom by itself. By the way, what''s the hurry ? To whom are u trying to prove and please ?
The article is incomplete. Do not substantiate with facts and figures. I will substantiate.China''s GDP 16 Trillion-dollarsIndia''s GDP 2.7 Trillion-dollarOut of Fortune 500 companies China have reached number of 120 companies.India has 007 companies only.To get more insight of China from pure Economic perspective read Eclipse by Arvind Subramanian.
Listen, this great nation was the world''s largest economy and 33% of the total world''s GDP. No other country has achieved it till 2019 and you comapre it just with China? This was the calibre of our people. It was looted by many robbers for their pleasure. But now we have someone who can protect the nation''s resources, who is honest and hardworking and who doesn''t spare corrupt and anti-nationals. I understand the pain of anti-nationals who want to spread negativity in our people but remember any go nment which is indulged in scams and co ption won''t get elected again. Our country could achieve any feat we just need to keep corrupt,anti-nationals and people with sick minds away.