India needs a distinctly different model of growth, than China
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Barun Mitra
Nov 23, 2013, 4:30:01 AM11/23/13
to Citizens-Initiative
Toward a uniquely Indian growth model
India can’t afford to emulate China. A prominent industrialist heading
the Mahindra Group, chairman Anand Mahindra says that India’s states
must compete, not march in lockstep, if India is to develop its own
path to sustainable prosperity.
by Anand Mahindra, November 2013
http://www.mckinsey.com/insights/asia-pacific/toward_a_uniquely_indian_growth_model?cid=reimagining_india-eml-alt-mip-mck-oth-1311
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 China’s.
India’s 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 orbit—growing
respectably at 5 to 7 percent each year but never breaking through to
sustained double-digit growth.
Video
Reimagining India: A conversation with Anand Mahindra
In this video, Mahindra Group chairman Anand Mahindra explains why
India’s states must drive the country’s economic growth.
Play video (To watch the video, please click
http://www.mckinsey.com/insights/asia-pacific/toward_a_uniquely_indian_growth_model?cid=reimagining_india-eml-alt-mip-mck-oth-1311)
According to this way of thinking, India is an underachiever,
perversely holding itself back—and 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 India’s progress by China’s, using metrics
like FDI and GDP growth, or statistics like the kilometers of highway
and millions of apartments built, we will continue to be branded a
laggard. India’s messy coalition governments are not suddenly about to
become as efficient and decisive as China’s 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 India’s—riven by religious, community, and caste
divides—those kinds of tensions can easily erupt in violence and
disorder. Already the battle between haves and have-nots is driving a
powerful rural insurgency across nearly a third of the country. Labor
riots can turn into religious pogroms. Farmer protests can turn into
class wars.
For India’s economy to expand as rapidly and yet more sustainably than
China’s, we need to make our differences into virtues rather than
vulnerabilities. For too long we have clung to a mind-set shaped by
the early independence years, when the areas in the northwest and
northeast had become Pakistan, and India’s first government was
struggling to weave a patchwork of provinces and maharaja-run kingdoms
into a nation. In those days, the risk that India might break apart
was very real. One of India’s great accomplishments is that no one
worries about that anymore. Indeed, the idea of a united India runs so
broad and deep that it allows us to consider a counterintuitive way of
thinking about growth—that the best way to propel the economy may be
to encourage different parts of the country to go their own way.
by Anand Mahindra, November 2013
http://www.mckinsey.com/insights/asia-pacific/toward_a_uniquely_indian_growth_model?cid=reimagining_india-eml-alt-mip-mck-oth-1311
India can’t afford to emulate China. A prominent industrialist heading
the Mahindra Group, chairman Anand Mahindra says that India’s states
must compete, not march in lockstep, if India is to develop its own
path to sustainable prosperity.
by Anand Mahindra, November 2013
http://www.mckinsey.com/insights/asia-pacific/toward_a_uniquely_indian_growth_model?cid=reimagining_india-eml-alt-mip-mck-oth-1311
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 China’s.
India’s 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 orbit—growing
respectably at 5 to 7 percent each year but never breaking through to
sustained double-digit growth.
Video
Reimagining India: A conversation with Anand Mahindra
In this video, Mahindra Group chairman Anand Mahindra explains why
India’s states must drive the country’s economic growth.
Play video (To watch the video, please click
http://www.mckinsey.com/insights/asia-pacific/toward_a_uniquely_indian_growth_model?cid=reimagining_india-eml-alt-mip-mck-oth-1311)
According to this way of thinking, India is an underachiever,
perversely holding itself back—and 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 India’s progress by China’s, using metrics
like FDI and GDP growth, or statistics like the kilometers of highway
and millions of apartments built, we will continue to be branded a
laggard. India’s messy coalition governments are not suddenly about to
become as efficient and decisive as China’s 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 India’s—riven by religious, community, and caste
divides—those kinds of tensions can easily erupt in violence and
disorder. Already the battle between haves and have-nots is driving a
powerful rural insurgency across nearly a third of the country. Labor
riots can turn into religious pogroms. Farmer protests can turn into
class wars.
For India’s economy to expand as rapidly and yet more sustainably than
China’s, we need to make our differences into virtues rather than
vulnerabilities. For too long we have clung to a mind-set shaped by
the early independence years, when the areas in the northwest and
northeast had become Pakistan, and India’s first government was
struggling to weave a patchwork of provinces and maharaja-run kingdoms
into a nation. In those days, the risk that India might break apart
was very real. One of India’s great accomplishments is that no one
worries about that anymore. Indeed, the idea of a united India runs so
broad and deep that it allows us to consider a counterintuitive way of
thinking about growth—that the best way to propel the economy may be
to encourage different parts of the country to go their own way.
by Anand Mahindra, November 2013
http://www.mckinsey.com/insights/asia-pacific/toward_a_uniquely_indian_growth_model?cid=reimagining_india-eml-alt-mip-mck-oth-1311
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