India's fixation with China

Demographic dividend

Then there is the much-discussed India’s “demographic dividend”. It is estimated that by 2020, the average Indian will be only 29 years of age, compared with 37 in China and the US. With the developed world facing an aging population, the fact that India is seeing an increase in working-age numbers should make the country happy, but even here the planners have been successful in snuffing out any hope.

India needs to create at least 10 million jobs annually to provide employment to the new workforce entering the market, a task difficult in the best of times but more so when growth is slowing down, when there is an acute shortage of skilled labor and when the manufacturing sector, the main engine of employment, is in the dump.

In the whole country, only 5 percent of the labor force is estimated to have had any formal training, just 25 percent of information technology graduates are said to be employable and nearly 92 percent of engineering graduates lack computer programming and algorithms skills. It’s telling that not a single Indian university features among the top global universities. The Chinese mainland has two, Peking and Tsinghua.

Meanwhile, the nation’s share of global manufacturing accounts for a little more than 2 percent. China, on the other hand, is miles ahead with a 22.4 percent share.

How the government is going to create millions of jobs and then employ a workforce that does not have the required skills in the first place is anybody’s guess.

As if all these problems were not enough, there is the all-encompassing corruption. Indians have to grease the palms of officials for all kinds of situations – and that can range from escaping a minor traffic fine, to getting out of murder charge, and to winning elections.

It is true that corruption is everywhere, including in China, but it is not as ingrained in society as in India. Moreover, corruption has not stopped China from providing basic services to its citizens, punishing criminals and corrupt officials, nor has it stopped it from investing in critical infrastructure. While China has some of the biggest and busiest ports in the world, India still does not have a single port where supertankers can call. Where China has dazzling highways and expressways connecting its vast stretches of land, India does not have a single decent national highway.

Some claim that unlike China, where decisions do not have to jump through several hoops before being implemented, the Indian system is slow to respond due to its political nature. This claim is only partly true. The competing political interests do bog decisions down, but to blame it all on the system is plain wrong.

Cracking down on corruption, like China is doing, providing basic services, building infrastructure and keeping the economic growth momentum going has more to do with vision and policy than the political system.

Policymakers in general and Modi in particular should focus more on inclusive growth rather than trying to overtake China’s bullet train, especially when it has already left the station.