Man-Of-War!

Hindi-Chini bhai-bhai! The term was coined way back in 1950s when Mr. Nehru was 'believed' to be resurrecting India from a disgraced, 3rd world country to something substantial. Since then we’ve come a long way; a long, long way. Today none of us would use this obsolete 'Hindi-Chini bhai-bhai!' phrase. We would rather clobber those who would dear this though. Why would we do that? What is this whole outrage is all about? What has happened in last 6 decades that has made, arguably, the two greatest nations of all times take different boulevards?


1991’s Economic liberalization, just a fancy phrase for economic reforms, could hands down be considered as one of the greatest things to happen post independence. Indian policy makers were adamant to open up the market for outsiders, but they had no other choice. India was sitting on a huge debt and no cash reserve to survive. The dormant volcano was about to get active. Socialist policies that Mr. Nehru held dear to were to be put off. The foundation was laid for what could be considered as biggest transition in the way we live, the way we think. The stage was all set to get socialist caterpillar out of its cocoon to transform it into a beautifully diverse capitalist butterfly.


Were we late to join the party? Yes, we certainly were. China understood the power of capitalism and the need for economic reforms way back in 1978. They were quick to introduce the aspects of a capitalist economic system. Before this, China was following the Soviet, Marxist-Leninists model of economic development. In mare 33 years, post reform, the PRC (People's Republic of China) enjoys the position of being called the world's second largest economy. Let's take a look at the facts here: In 1991 China’s GDP (Gross domestic product) was USD 409.165B with 10th rank while that of India’s was USD 289.362B with 15th rank; 2/3rd of China’s GDP. 'Meh! Great deal?! We didn’t lose anything despite showing up late.' You would say. But keep in mind the fact that India had just joined the race and it had an ample amount of opportunity and potential to give it a full throttle to out rank anyone in between. Check the latest figures: in 2010 India’s GDP stands at USD 1.5 Trillion at 10th rank while China has outperformed everyone else but USA with 5.8 Trillion of GDP securing 2nd rank. China has been growing at a rate of 10-11% for past decade. India, on the other hand just managed to hit 8-9% recently. You do the math. Flabbergasted?!


What happened? What wrong did we do? Or what is it that China did that we didn't? How come China grew by leaps and bounds and we barely managed to stay afloat? The answer is many fold, but things that top the chart are: Corruption, Political incompetency, mediocre economic policies, low literacy rate and democracy to some extent.* It is projected that India would outrank USA in GDP to hold the sliver by 2040 (by this time China would’ve secured #1 spot) and by 2050 India would be at the pinnacle of GDP race. In my opinion, for this to happen, India would have to go through huge reforms. Reforms in the field of Leadership, and by this I mean politics, economic policies and law.


Many would argue that though China is glittering it’s not all gold either. They, too, carry baggage, and heavy baggage at that, along. I couldn't agree more. China’s growth has been ostentatious if not outrageous. Reason: political perseverance in nation’s growth story. In China, 80 odd percent of GDP comes from SOE (State Owned Enterprises). Dictatorship is what has accelerated its growth. Though it's a spring time of growth in China, many investors would refrain themselves from frolicking! Why is that, exactly? Simple answer: China is a gray box. Almost all the huge enterprises in China are State owned, ergo, not answerable to the investors. They are spending more than half of their GDP on building infrastructure (take a look at this; the New South China Mall, apparently the biggest mall, is 99% vacant since it's opening in 2005). China's growth story owes a great deal to exports. This export-driven economy is shifting its gears to focus on domestic consumption. This, it seems that, would not happen anytime soon. What about demographics? Yep, you guessed it right. Screwed up! China’s most controversial one-child policy is taking a toll now. It is said that China is getting old, before it gets Rich! It is expected to hit 65% mark on dependency ratio by 2050 while India would be around 45%. When ranked based on per capita income, China stands at 12th position, which is derogatory in a sense that it holds second spot when GDP is taken into consideration. Yuan manipulation, human rights, freedom of speech, adamant government, rule by law…the list could go on and on and on… Gist: China is biting off more than it can chew!


Okey, China is in soup, but we are no good either. We are morbidly disgraced by puny policies, lethargic leaders, leprous law, corny casteism, sarcastic sexism, et al. We are, in fact, a warehouse of mess-acre… pun intended. Thing to ponder upon would be who finishes the gut wrenching job of repairing the system first? Would it be bearishly slow, sluggish and smothering India? Or would it be bullishly atrocious, assailing and assaultive China? Easier said than done! This is something only time will tell. Wait & Watch!


*Democracy is good, but its absence has been bliss for PRC. Let’s just face it that it is easier to get something done when dictated which could take ages to reach consensus. Nonetheless, India or any state, for that matter, is better off riding slob democratic elephant than opting for serpentine dictating dragon's ride for a fall!