"Why India will overtake China"

Fortune projects "a generation or so down the line, it is India that is going to be the Asian tiger that everyone watches."

Much as I would like to see it, I think there may be a big gating factor.

Fortune and other Westerners forget that we have, for the most part, political AND economic democracy. India does have a political democracy (a vibrant one, and an active press to boot), but it does not have an economic democracy. While the middle class has grown nicely in the last decade or so, the poor keep on growing.

For all the continuous improvement and Six Sigma focus of the Indian software industry, there is a Hindu perspective on accepting the way "things were meant to be". That will continue to create lop sided growth and its own set of significant tensions.

We should continue to beat up China for its lack of political democracy, but I would suggest it will have a much more of an economic democracy in a generation.

Comments

[M. Srikant]

Vinnie,

I think you have not been watching closely.

The unilateral political activism of the OBC/SC/ST driven policies combined with an extremely vicious activist press will eventually bring economic democracy from the bottom of the pyramid, unlike brutal maoist economic equality imposed from the top like in China. And the engine for economic democracy, the private sector manufacturing base, is just ramping up in India.

Political democracy is much harder to transition and achieve for China, without a significant period of confusion and chaos about ideology.

Two anecdotal cases in point: You haven't noticed riots recently inspite of severe attacks, is because the press (News TV) does not tolerate demagogues. They will shred them to pieces (much like the blogosphere). Compared to the Indian TV, American TV is tepid and timid.
The other point, Lalu Prasad went from the most reviled politicos to the most efficient turnaround manager of the railways...

[viinnie mirchandani]

Srikant, I promise to look clsoer next time I go to India. But I seem to go every quarter and I was not making that comment glibly. I am glad to see change come from within, bcause many Indians do not like to be told by outsiders about infrastructure and poverty issues - the comment usually is "the west only sees and portrays our negatives"

[M. Srikant]

Vinnie, I totally agree, infrastructure is a real problem. But now there is extreme awareness in the rank-and-file of all walks of life, that India will slip from the 8% growth rate with inflation, if this issue is not rapidly tackled and alleviated. And that is not entirely possible without massive targeted FDI or deep internal capital/derivative markets. Singh govt is working overtime on both these. Its a race against time...

[Avneesh Balyanba]

Srikant,
Deal Architect has some points here (You can read my comments, I am not a China lover). Last weekend, I had long (whole night, till early morning) discussions with friends (in IT domain, from IT consultants to Infosys Employee) on this issue.
Growth centers like B'lore, H'Bad, Noida are OK. But did you ever try to map Maoist growth pattern. Why its starting from Nepal to straight reaching Andhra Pradesh. No big city, and its tribal or forest belt. Why Gender ratio is dropping from Satulej to Ganges plain, which was flag bearer of green revolution. To me, the population is still in agriculture there, and caste based society is sustaing iteself against new growth. (I am from that land, and I can tell, in my ansectral village, 70% of male of my age are unmarried. People are literally buying brides from Assam/Nepal).
I dont want to be negative, and I am not. We will grow, but the current pattern needs some drastic changes. It needs economic democracy (Deal Architect point). New policies giving push to entrepreneurship, thats what Indians were. A great debate of fifties between micro credit based economy or growth center based (Nehruvian model) needs to be revisited.
This is my fav topic, but this is not a place to discuss.
Cheers...

[vinnie mirchandani]

To Avneesh's point, according to the CIA Fact Book, 60% of India and 50% of China's population is in agriculture - dated technology and practices, continuting only 15% or so of GDP. In spite of other achievements. both need to quit listening to stories about their "success" and fix that problem.