The Hindu Business Line : Hare and tortoise

THE old fable of the hare and the tortoise is being played out before our eyes, it seems. Ever since India liberalised, it had been fed with a heavy dose of inferiority complex with reference to China.

It was assumed that China, the hare, was leaving India, the tortoise, far behind. Goldman Sachs represents this school, holding on to the view that by the year 2030, China will be ahead of even the US, with India and Brazil ranking third and fourth.

But now, the world over, observers are hedging their bets since they are not so sure that China is going to be the winner. In fact, the purport of recent scholarly articles is that India is all set to overtake China.

India can wish for no greater testimonial than that of the guru of gurus, Peter Drucker, who in a recent interview to the Fortune magazine has been categorical in asserting: "India is becoming a powerhouse very fast.... . In China, the likelihood of the absorption of rural workers into the cities without upheaval seems very dubious. You don't have that problem in India because they have already done an amazing job of absorbing excess rural population into the cities...

"Its rural population has gone from 90 per cent to 54 per cent without any upheaval. Everybody says China has 8 per cent growth and India only 3 per cent, but that is a total misconception.... India's progress is far more impressive than China's.... India is indeed becoming a knowledge centre."

Another detailed comparison of the Chinese and Indian models of economic development made in a paper jointly written by Dr Yasheng Huang, an associate professor at the Sloan School of Management and Dr Tarun Khanna, a professor at Harvard Business School, has also turned up trumps for India.

It points to China's failure to encourage domestic entrepreneurship and its lopsided dependence on foreign direct investment, with the result there are few local firms in the private sector there which can be called world class companies. By contrast, to quote from the paper:

"India has managed to spawn a number of companies that now compete internationally with the best that Europe and the US have to offer. Moreover, many of these firms are in the most cutting-edge, knowledge-based industries....

"Last year, the Forbes 200, an annual ranking of the world's best small companies, included 13 Indian firms but just four from mainland China.... India displays every bit as much dynamism as China. Indeed, by relying primarily on organic growth, India is making fuller use of its resources and has chosen a path that may well deliver more sustainable progress than China's FDI-driven approach. `Can India surpass China?' is no longer a silly question..."

Bravo, India!