India's fixation with China

India’s prime minister-elect Narendra Modi, who will be sworn in on Wednesday, is said to be obsessed with China, but he is not alone. There are many Indians, from ordinary folks to owners of big media companies to economists, who endlessly talk about their neighbor across the northern border.

But is ‘beating’ China a realistic goal, or a mere fantasy?

Here’s where both countries currently stand. Individual per capita income in India is $1,504 while in China it is $7,047. Compared to China’s $9.3 trillion gross domestic product, India’s is $1.87 trillion. Foreign exchange reserves of India are $311.85 billion and China’s nearly $4 trillion. India is struggling to post a growth rate of 5 percent as China records 7.7 percent.

The picture turns bleaker for India when a closer look is taken at some of its social indicators.

About half of all Indian children under five are underweight, compared to just 4 percent in China. Nearly 50 percent of the country does not have toilets, which means more than 600 million defecate in the open. In China, less than 1 percent do not have toilets. A third of Indians, or 400 million, do not have electricity, compared to 1 percent in China. In India, wages in the manufacturing sector have increased by 2.5 percent since 2000, while in China they have risen 12 percent.

While there are many reasons behind this disparity, the overriding one is that successive governments have followed the wrong policies. The focus has been on pushing the growth rate higher without ensuring that the fruits of economic progress reach all classes of society. This has resulted in a completely uneven development. Nothing illustrates this better than India’s richest man, Mukesh Ambani, living in a 27-story house in Mumbai, a city where millions of families sleep on the street because they cannot afford a house. In a country where 300,000 farmers have committed suicide since 1995, thousands go to London and spend about $400 million every year just on shopping.

It’s not that other countries, including China, do not have people who are struggling to get by. The difference is that these nations have taken steps to close the gap and so the disparity is not as stark as in India.

China spends nearly four times more on healthcare than India, a country where 48 percent of children have stunted growth due to lack of nutrients and where child malnutrition is higher than Eritrea. The adult literacy rate in China is 91 percent. In India it is 65 percent, which means that 35 percent adult Indians do not have basic reading and writing skills.

The thinking of policymakers in India has been that if the country is able to achieve a growth rate of around 8 to 10 percent, then the benefits will automatically trickle down to the poorest and most marginalized members of the society. That simply has not happened. Rich and middle classes, who already had access to the best education, healthcare and resources, have been the biggest beneficiaries of this lopsided approach, cornering all the tax benefits, subsidies and lucrative government deals. The poor, meanwhile, have been left to survive with an atrocious healthcare system, badly run government schools and backbreaking jobs.