Second, China has kept at reforms relentlessly — in our case, even since 1992, we have pushed reforms only by fits and starts; and even then, there were more feet on the brakes than on the accelerator. The third difference, of course, is execution: China has actually, and mercilessly, implemented what it decided; we have been halted by our processes — land acquisition, court proceedings, changes of government; and just as much by thoughts of brilliant alternatives — “Why not this way?” — and second thoughts. There is a telling index of this: even after the figures are put on comparable basis, China has been receiving seven times the foreign direct investment that we have been getting; and this, even though in the manufacturing sector, for instance, the ceiling for foreign investment has been 100 per cent for several years now.

We are often carried away by figures of inflows these days. We should remember that in the last five years, only 17 per cent of foreign inflows into India has been in the form of FDI, 83 per cent has been FII inflow. That 17 per cent compares with 68 per cent for other emerging economies.

The difference

We should temper our self-congratulation by reflecting on the difference that these factors have made. An excellent study by Steve Roach, Chetan Ahya and their colleagues at Morgan Stanley, points out that, as recently as 25 years ago, the per capita incomes of China and India were about equal. Today, China’s per capita income is two and a half to three times that of India. During this period, China’s average growth rate has been 9.5 per cent. Ours, 5.8 per cent. Its GDP has grown in this period by 7.5 times. Ours by 4.5 times. Its economy is now close to three times ours.

... contd.