Column: A uniquely Indian growth model

Dec 07 2013, 05:02 IST
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SummaryStates must compete, not march in lockstep, if India is to develop its own path to sustainable prosperity

When I listen to pundits, economists and multinational CEOs talk about India, often I detect a familiar note of frustration. India, they insist, should be blasting upward like a rocket, its growth rate ascending higher and higher, bypassing that of a slowing Chinas. Indias population is younger than that of its Asian rival and still growing. Its democratic government enjoys greater legitimacy; its businesspeople are more internationally adept. And yet the Indian rocket continues to sputter in a low-altitude orbitgrowing respectably at 5% to 7% each year but never breaking through to sustained double-digit growth.

According to this way of thinking, India is an underachiever, perversely holding itself backand needs only to fire some particular afterburner in order to get its rocket to full speed. The government needs to go on an infrastructure building spree, or open the door to big-box retailers. Political parties need to crack down on corruption and nepotism. Farmers need to adopt smartphones. Something will trigger the long-awaited boom, and the billions in foreign direct investment (FDI) that have flowed to China over the last two decades will at last head south.

If we continue to judge Indias progress by Chinas, using metrics like FDI and GDP growth, or statistics like the kilometres of highway and millions of apartments built, we will continue to be branded a laggard. Indias messy coalition governments are not suddenly about to become as efficient and decisive as Chinas technocrat-led Politburo. Nor should that be the goal.

Moreover, India simply cannot afford to grow like China has over the last two decades. In authoritarian, tightly-controlled China, the costs of that headlong economic expansion are obvious. Unbreathable air and undrinkable milk, slick-palmed officials and oppressive factory bosses provoke tens of thousands of protests each year. In a society as diverse as Indiasriven by religious, community, and caste dividesthose kinds of tensions can easily erupt in violence and disorder.

Theres no sense in pretending that India is a single investment destination or even a coherent, unified economic entity. Indias 28 states and seven territories are as different from one anotheras varied in language, food, culture, and level of developmentas the nations of Europe. In some ways, Gujarat has more in common with Germany than with Bihar. Companies understand this. When they make decisions about where to locate factories or R&D hubs, theyre looking at the tax policies, physical and legal infrastructure, or labour costs in the particular

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