Thursday, April 12, 2012

Why the Indian Elephant is not a Chinese Dragon




I have always been following the Success and Development of China along with that of India. Some people have compared it to the Hare and the Turtle, others the Elephant and the Dragon.  The next century of our lives is likely to be shaped by these two great Economies. I have just read the Book Billionaire by Tarun Khanna a Professsor in Harvard and another Book the amazing race between China’s hare and India’s Tortioise by Raghav Bhel, the man behind CNN IBN and other TV networks. 

 I had already written my assessments earlier in my previous post in 2007 where you can have a look by reading it here.

I have not yet been to China but as I do live in India, I am going to write below what I feel is often a wrong projection by Indiophiles. It sometimes seems to me that some Indians take offense when talking about the inferior performance of the Indian Economy compared to the Chinese Economy, they then start talking about Indian Superpower and have coming of age, I am going to avoid such niceties and will write straight from my gut what I feel ails India and what India as a Nation has to learn from a developing Economy like China.


1.       Indian Demographic  Dividend-  Almost every Indian author and Indian newspaper criticize China’s Dictatorship and one child policy and talk with much righteousness about the Indian Demographic dividend, which is nothing else but India’s projected population growth, but the sad thing here is that not even 75% of Indian population is literate while China has a 95% literacy. , forget about being college going graduate. China's population is projected to peak at 1.46 billion people and then slowly decline in 2032 whereas India's population is expected to peak at 1.61 by 2050. India is expected to overtake China by 2028. China has a higher urban population at around 50% while India still has an urbanization rate of only 28%.

      Agreed and appreciated that there are those IIM and IIT graduates in India but how much of that benefits the Country's population, most of these IIM and IIT  graduates along with Medical graduates look for greener pastures abroad, of course there are the few that return but they are less then those who Immigrate, having once tasted the transparent, efficient governments of the West, most of this Diaspora have a hard time adjusting to Indian Bureaucracy and Indian Political system.

       In China, most of the their smartest graduates from Peking university, Tsinghua University are selected and groomed to become the leaders of their country, contrast that with the typical  rustic populist Indian pollitician (Lalu Prasad) with the mindset of only winning the next election and not having any long term strategic vision for their own country, of course there are some exceptions like our PM Manmohan Singh, but then the few that are good are tied behind their back by Feudal Lords or their Coalition power who are intent on keeping up with their populist agendas regardless of how this effects the country’s development. For instance the Chief Minister of West Bengal has blocked Foreign Investment in Retail, Aviation and many much more needed reforms, but the government is not able to make much progress about it. With regards to this matter, it would not be fair to criticize only the CM of West Bengal, rather it’s the people who are to be criticized, are Indians ready for democracy? As Spider man's Uncle had told him, 'With great power, comes great responsibilities'.  The voting power that rest with the Indian voter is a great power which if misused can wreck a country,  and in a country like India where many elite educated rich voters do not vote, many of the illiterate, poverty stricken people are coerced and bribed into voting by politicians by mean’s of giving them money or some short time benefits which do not have any benefits for the country.  Without meaningful intervention by the Indian Government in skilling not only the elite and super elite people but the common people of the country, the Indian population growth  would not bear dividend, instead it may become India’s biggest liability.

2.       Chinese Economic Slowdown due to reduced population-  There has been lots of talks about Chinese Economy going to come to a crash due to it’s less working population by many Indian authors but again I disagree on this point.  Even though China maybe the Factory of the world now and producing different kinds of goods, it’s slowly moving up the value chain of  manufacturing, From manufacturing toys and textiles, it has moved on to production and manufacturing of Cars, Computers and Internet Servers eg Cherry, Lenovo, Huawei etc.   As China has had only a single child policy, we can be assured that aided with the government’s policy of compulsory education coupled with attention to children’s education, he/ she would have better education that the previous generation before him, hence have more income, and as stated earlier,  as the country moves up the value chain, has increased income to help support need of not only immediate family but also his/her parents.  Beyond that, even if the person does not have a steady income, China, a developing country has $ 2 trillion dollar invested in US bonds,  probably enough to be invested into a pension fund to invest in healthcare needs of it’s ageing population. 

3.       Culture – There’s not much that I know about Chinese culture, except that Confucius has a strong influence, Tsu Zu of the Art of war is from china but I do not know how strong he influences their culture but I definitely know that Buddhist way of life was  imported from India through the Silk route and has a strong influence in their culture. Due to the communist regimes during Chairman Mao, I would assume that many of them would also be Atheist but it would be difficult for me to speculate on the brighter or dark side of it.

With regards to Indian culture, let me first say that while the Dominant Hindu culture has a very important influence in the society, one of the things which is being eradicated but also still a challenge is the Caste system within India where you have the Priest, Warrior, Trader and Low case people. Let me just dwell on the low caste people, who are the lowest of the lowest. Some of the low case people are expected to remove the defecation of the people from their houses and are considered as untouchables by the rest of the caste, while this may have it’s uses in the days when there was no proper drainage system, it’s still being practiced.  I would like to take Illustrations from two states of India West Bengal and Tamil Nadu. While I was in Tamil Nadu, I had 3 Zonal offices under me, where I used to carefully budget their monthly expenditure, what I found out about the office cleaning greatly upset me, they had one person to sweep and clean the office and but another person to clean the bathroom, I said I could not tolerate that, if the person cleaning the office would not clean the bathroom, let the person cleaning the bathroom clean the whole office, I was not interested in being a party to promoting case system. Having said that, Tamil Nadu has a very strong upliftment program of the lower caste started by Periyar which is  slowly empowering the weaker sections of society. . Another experience I had was in Kolkata where I was living as a Paying Guest, when I first went to the stay there, I found the toilet extremely dirty, stinky and unclean, there were atleast 6  people staying in that guestroom but no one, including the cook and attendant were keen on cleaning the bathroom, they were waiting for the low caste person to clean the bathroom, Not able to bear it much longer, I took out the acid/ bathroom washing stuff and cleaned up the bathroom  myself.  The reason that I have given such long illustration on the caste system is that even though sometimes suppressed and hidden, it plays such an important role in Indian society, Go visit any major city in India- Kolkata, Bangalore, Chennai, Indore, Guwahati, what do you see – lots of dirt, dust, defecation and papers strewn all over the place. This I would say has to do with culture because you go visit an educated Indian person’s house, you have to take off your shoes before entering their house but the same house owner would not have any problem if he throws garbage just outside of his walled compound residence. This clearly shows that many Indian think that the work of maintaining cleanliness is a menial job which should be reserved for the lower caste, and they are not responsible in maintaining the cleanliness of society. This Irony is reflected in the Indian IT/ Biotech sector where you have world class research and business centers, clean and well maintained but outside these office complex you can see dirt, dust and Chaos all around, this also reflects the neglect of basic Hygiene and Sanitation not only by the Government but also by the people of India.

4.       India’s Private Sector Vs China’s Public Sector- Much has been written of India’s corporate success, success stories like Reliance Industries, ITC, Infosys abound along with India’s vibrant corporate culture, while of course there are  also the fraud cases in corporate world like Satyam, Harshad Mehta, etc which have also given a bad name to the private sector.  In India Corporate, Billionaire and Millionaire Philanthropy is also still at a very nascent stage in India while Tax evasion is still a big issue. But as many would say, Corporate India still moves forward in spite of the challenges posed by Bureaucratic hurdles.

      Sometimes, the Central politicians pronounce with much funfair and media publicity some social endeavors in Education  and Health but many of these schemes sometimes are never implemented and never seen. To my simple imagination, sometimes it’s easy to think that there’s a very strong nexus between the corporate world and the Politicians to see that some of these public endeavors are not successful as it would effect the profit margins of the corporate world. For instance, we know that the  Indian Government has mandated Primary health centers and Pre Schools (Aganwadi’s) to be installed in most neighborhood, but to a common citizen, you hardly see them, even if you visited, these places would be so badly maintained that you would not feel like using it. Many Indian Government Hospitals specially at the District level are extremely unhygienic and dirty with dogs and cats in the hospital corridor with garbage thrown all  around, this in turn gives incentives for Private medical Operators as well as Pre school operators to charge exorbitant rates to citizens so that they can get a certain quality of services, but then in a poor country like India only about 10% of the citizen can afford this kind of services, so in turn what happens is that most of the poor people do not send kids to substandard education schools as well as get admitted in this filthy government clinics, moreover in  a country like India where there is no social security, this poor people keep on having more kids as a kind of social security to have someone to look after them when they grow old, they  cannot have only 1 or 2 kids, as mortality rate is higher for the kids.

       With regards to China, during Mao’s reign, most of Private enterprise was collectivized and private enterprise was not encouraged, the economy was a mess, but with their entry to World Trade Organization, they have given more autonomy to their PSU but still give them strong support,  Intellectual property rights are weak but favor Chinese firms, as they have got a lot of  Foreign Direct Investment into their country, they have tried to leverage on that and have acquired the technology from many of these corporates in less than ethical ways who in turn have become direct competitors of the same corporates which were investing in China. 

5.       Infrastructure- Infrastructure is one area where India lags behind China, where as China follow a meritocracy basis of promotion, where depending on how well you do your work, how much Investment you get into your state, how much employment you generate, you are promoted from the provincial level to the upper eachleons of the Central Communist Party Committee.  Many of the past and would be Chinese Presidents / Prime Minsters have a common background,that is they have an Engineering background from the top Institute of the country ( like IIT in India)  and they also have experience working as Party Secretaries (like CM/ Governor)  in the Provincial level, based upon their past work experiences they progressively move up the ladder of the party, Contrast  this with India where the politicians elected are not the smartest, most honest or those that have the best record but most likely the most populist, sometimes a law breaker and most of them not very highly educated themselves. Their immediate priority is to meet the whims and fancy of their constituency and win the next election.  This in turn has an adverse effect on the infrastructure of the road, take the case of
(a)    Roads in India- most of the roads in India have big potholes and are very thinly surfaced with a purpose, most of the Tar surfacing would be done 2-3 months before monsoon (rainy season) after which the road becomes spoiled again, which in turn is repaired by a contractor close to an Indian Politician, the Contractor constructs a substandard road and shares the rest of the pocket money between himself and the politician, another strategy followed by the Contractor Politician nexus is  to delay Infrastructure projects from 2-3 years upto even 10 years where the cost of the project escalates even beyond 100% of the Initial Project estimation, the spoils of these returns is again shared by the contractor/ Politicians nexus whereas the rest of the population suffers, economic growth gets retarded because of the long traffic jams which increases fuel consumption, the bad roads results in increased wear and tear on the vehicles again, all this would probably result in slowdown of the economic growth of the country.
      India has 1,000 km of expressway with 2,600 km under construction, contrast this with China which has 50,000 kms of Expressway in just 20 years with 85,000 more kms under construction. 
(b)   Railroads in India-  Even though India has one of the densest railway tracks in the world, it’s one of the worst maintained railway lines in the world. Go to any Indian railway station and search for a toilet, it would be so dirty most of the time that you would have a hard time defecating, which is why if you travel by Indian railways and happened to pass some Indian village, town or cities you would see a lot of men and women defecating on the railway tracks. The train toilets are further even dirtier, even the  toilets in Air conditioned coaches have the excreta stain on the steel pans and are never cleaned by coach attendants, to make it worse, the Tea/ Coffee hawkers boil the water for serving beverages near these areas, which is really unhygienic.  The local train in India are overcrowded with most of the passengers not even paying the ticket amount which has remain unchanged the past 10 years, the crowd gets so intense that you would not need any support to stand at all in this trains, you would be crushed on all sides giving you enough support on all sides to keep you standing.  The reasons for all these being that Infrastructure is not being upgraded, services not being improved, but these things cannot be implemented because Indian railways there is not enough money to invest in this infrastructures. With the very high rate of Inflation, it would seem reasonable to restructure the cost of railway tickets so that operations at least breakeven with a small amount for infrastructure development but that is not the case as the Railway ministry is the kingdom of populist politicians who make no  Infrastructure improvements  even in the face of accidents due to Insufficient Safety Infrastructure.
      India has the Diesel railway engines which have not changed much with a maximum top speed of 80km per hour  and had already set up the railway system in 1832 during British Colonial rule, Contrast this with China which only started their railway industry in 1876 already has Megalev (magnetic) train in Shanghai as well as the fastest Train in the world CRH 380A  with a speed of 486 km per hour with Airport like efficiency and cleanliness in their railway station and railway services.
(c)    Airlines/ Airports- I can’t say much about the sea ports as I do not have experience and knowledge of seaports so I’m skipping on that but with regards to Airlines, if at all you are a visitor coming to India, I can give you one Advice- avoid Indian Airlines or Air India because they don’t give a damn about their passengers. Starting with Air India, I have had passengers telling me about inordinate flight delays, baggage being misplaced without the slightest hint of regret,  while in the Domestic circuit, it’s the Indian Airlines where it would need a lot of courage on your part to ask the old lady air hostess for even a glass of water with the attitude and stares given at you. Both these Indian Airlines/ Air India have been merged into one Indian entity, even though Initially a  private enterprise operated by JRD TATA, founder of TATA Industries, they were nationalized during Nehru’ time and slowly deteriorated in quality. Indian Airlines are being operated by the famous elitist generalist of the country, the IAS, the civil service of the country, most of these bureaucrats while being MD seems to operate it with the intention of making the maximum utilization of the privilege for free flights for families, Holidays abroad etc instead of turning the loss making airlines into profitable ones. As stated earlier, their could also be strong politician/ businessmen nexus to see the airlines bleed so that the private Airlines profit.  It’s difficult to make a judgement but one would assume that it would make much more better and make more sense if the Indian government was just the regulator, quality controller and monitor of the Airlines and not the operator of an Airline as it would make it’s income from licensing, airport usages etc anyways. 

With regards to Airports, there is a stark contrast between Private operated Airports and Government operated Airports, Private operated Airports like the Indira Gandhi International Airport operated by GMR in Delhi stand in dark contrast to Subash Chandra Bose Airport in Kolkata operated by Airport Authority of India and infested by local labor unions, While the Delhi Airport is upto International standards, the Kolkata Airport is chaotic, dirty inside and outside the airport (lots of touts outside the airport), there have been instances where I have seen a dog, a cat and a leaking roof in the kolkata Airport. Almost every staff in Kolkata Airport thinks that they are the boss, they do not do their duties, are not accountable to their airport bosses and only respect their political parties which in turn leads to a mismanaged airport facility.

Contrasting with China, it has the 2nd busiest  Airport Terminal in the world and it's already developing it's own Aviation Industry COMAC to compete with Boeing and Airbus Aviation Industries. COMAC C919 is likely to be ready by 2015.
               
Concluding remarks
I really don’t think it’s really fair for India to be compared to China but then both were very poor countries 20 years ago, one has moved far ahead, the other way behind. The Chinese model of development may have some lessons for India which it could learn and implement but what we can learn most from the Chinese model of development is that one has to find it’s own way of development, the chinese being pragmatic people did not follow only Communist socialist principles but more or less have become a Communist Capitalist country with a Corporate like structure which they have modeled it according to their needs, this model of governance could still evolve as the economy evolves.
With regards to India, it would be more fair to compare India to European Union and not China, a homogenous country, India is a heterogeneous country held together by a very thin thread by the central government, the central government of India is so sensitive to the Federal structure that it would not permit the state government to have Governor like structure of the US with executive power but the Governor to oversee the chief Ministers, State Governments are still not allowed to Have their own stage flags.  Present India is just a legacy of British rule with many of the states forced to join the Indian Union much against their free will, there is not such thing as an Official Indian language, other languages have a history just as prestigious as Hindi like Tamil, Bengali, Punjabi etc  There is no Official Indian Culture, there are hundred of beautiful Indian culture. Taking all these into consideration, it’s important that India also evolves it’s own system of governance like the Chinese taking it’s own strengths, limitation and history into consideration.  Inadquate and Old laws must be changed, the British Parliamentary system may not be the best for India, it may have to be tweaked according to Indian circumstances, similarly it has to come up with it’s way to deal with the Federal structure of the Country, look after the primary needs and sustainability of the country. The only things that’s keeping India together as a Country is it’s Economic growth, the benefits of the economic growth must be shared throughout the country, While coastal Chennai (Tamil Nadu) with Hyundai, Nissan, Nikon and Motoral maybe buzzing with Industrial growth, the is stagnance and poverty in Kolkata (West Bengal), Maharashtra maybe having the Lion’s share of India’s export but the people in the Jungle of Jharkand do not have enough to make ends meet. If the Poltiicans of India do not make amends to make the country productive, continue on the path of economic reform and growth with Indian characteristics, a day will not be very far of when India will also Balkanize like the USSR.

6 comments:

  1. Great piece! Just a small correction,'I think its, 'With great power, comes great responsibilities' and not the other way round. Anyways, well written.

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    1. Hi, Thanks for reading through the whole thing and letting me know of the correction. Atleast I now know that atleast someone's reading my blog :-)

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  2. if u were in china , then u would not be able to spread ur missionary mission there .......................u are just a moron, who does not see the goodness of democracy which is present in India not in china, u would have been buried in china for writing this bullshit.

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    1. Hi George, I did not write this to praise China or glorify the country, they do have a communist dictatorship, they have a lot of weakness. I have written this article with the intention of benchmarking India with China, overcome our weakness, hone our strengths and compete with them so that we can overtake them, specially in terms of our human resource which needs better quality of skill training and development.

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