Sunday, July 23, 2006

Why Time and Newsweek are wrong

In an odd bit of either bandwagon hopping or editorial copycatting, Time, Newsweek, and The Economist have had large features within the last few months on the rise of India and Indian business.

Due to a maturing China, worries (mostly in America?) about an undemocratic "Communist" state becoming an economic superpower, and a general desire to be first to spot the next big thing, various pundits are rushing to hype up India as the next big thing.

There are many figures given by said pundits to explain and extrapolate India's rise. Time says, for example, that since 1996 the number of Indian passengers on airlines has risen sixfold and that 50 million people travel on Indian airlines a year. To put that particular figure into perspective however, 50 million is only about 5% of the total Indian population. 95% of Indians don't travel by air at least once a year would be another way to read that factoid.

When comparing China and India, the one main positive where India is claimed to trump China (because it doesn't in other KPIs such as quality of infrastructure, government commitment to genuine development, per capita income, etc. etc.) is that it is "the world's largest democracy". It's never really clear what benefit this is supposed to bring, or why it means that India's rise is inevitable. Indeed people who sing China's praises say that its biggest advantage over India and some other Asian countries is that government's ability to turn on a pin when it comes to making decisions. The Chinese government does not to have to wait to pass legislation and make sure ministerial posts and other favours have been granted to ensure other lawmakers and parties are on board. If anything, being the world's biggest democracy is a disadvantage. Anyone who follows Indian politics will know it's highly fractured and coalition governments are ridiculously huge. To give one indication of the size of Indian government: There are currently 34 cabinet ministers, 7 ministers of state (independent charge), and 38 ministers of state. If anything India's development has been handcuffed by the sheer range of vested interests and local concerns that have to be taken into account before any significant change happens.

A recent BBC article explains why China is still poised to be more successful than India. It's what prompted me to write this post and I think it more succinctly makes the point than I can.

Having said all that however, I wouldn't count India out. The Indian people have a lot of faith in their country and a positive can-do attitude. Indeed if there's one nation on earth more like America than any other in terms of the people and their personality it's India. They just have a long way and a lot of introspection to go through before they achieve the feats the pundits have already laid out for them..