The latest Asian Development Bank Report notes that India has emerged from the crisis relatively unscathed and quickly re-gained growth momentum, thanks to its own fiscal stimulus package, past reforms, the banking system’s limited exposure to the troubled part of the international financial system and strong domestic consumption.
India is doing extremely well but so far China has done better. There is a healthy obsession with why this is so among Indian analysts. In two essays on India this week, Raghbendra Jha reckons India’s monetary policy has been too restrictive. Nervousness about inflation, he argues, is misplaced — a product of the ill-conceived mismanagement of food prices, not general supply side bottlenecks across the economy. Rajiv Kumar sees other problems in manufacturing, with failure to implement investment reforms and capture the benefits from a wider range of foreign investor interest. The comparisons between Asia’s two well-performing giants can only intensify over the coming years.
Well the ‘healthy obession’ as you would like to call of comparision between China and India is a non-starter (I don’t want to be rude and call it a no-brainer). China I would say is way ahead of India in terms of all the parameters. This maybe reflective of the governance system in the two countries, but there is a strong belief that Chinese believe in getting things done whereas Indians love to procastinate. Things eventually happen – they have to happen. Had the government been pro-active things would been much better but governments in India are known to work only when there is no choice aka 1991 reforms because of a sever BoP crisis. Similarly another shock would pull India out of its slumber vis-a-vis reforms and then maybe we can think of being in some competition with Chian. Not till then.