Yes indeed, it’s all mere numbers (‘Growth illusions’, January 22). China’s economy is around 3-4 times bigger than India’s (based on nominal GDP or on PPP), hence the base over which GDP grows matters. And as has been rightly pointed out, we lag behind in all social indices compared to China. We also lag behind in the strategy for growth; China has already established itself as the ‘world’s factory’ and India has just started its ‘Make in India’ policy. China is moving towards ‘Create in China’, meaning focus on technology, R&D and innovation.

Nevertheless, India should continue its pursuit of growth. China’s growth has also led to over-capacities, under-utilisation and ghost cities. India should invest prudently, get inclusive growth, improve per capita income, and sustain development. Forget about the numbers and comparisons with China, India has to focus on what is important and workable for it.

Sridhar Narasimhan

Email

China’s savings are 67 per cent higher than us; that would explain its superior economic clout. There is a strong empirical relationship between growth and savings in a progressive economy. India’s household savings, which fuelled growth over the last few years, dropped from 11.63 per cent of GDP in 2007-08 to 10 per cent in 2010-11 and to a 22-year low of 7.8 per cent in 2011-12 .These do not portend well for the economy.

Around 70 per cent of the country’s savings comes from the household sector, yet these carry rates of return that barely cover inflation. Poor incentives force savings towards physical assets like gold and land. Large savings help leverage capital that provide funds for investment and potential business and so, economic growth, and thus stand to lose vitally needed time for economic rebound.

Large-scale generation of savings, while favourably impacting inflation, would also enable the RBI to start easing key rates. The financial savings of the nation, mostly government owned, are deployed inefficiently, often providing an average rate of return that barely covers the inflation rate. These savings which are supposed to fund healthcare, primary education and the care of the elderly, are used in unproductive populist schemes.

R Narayanan

Ghaziabad, Uttar Pradesh

In essence, China is far ahead in respect of drivers of economy — ease of land availability and use, high savings to boost financial capital, robust and skilled human resource, ease of doing business, sound infrastructure, absence of hurdles like stringent labour legislation, unpredictable taxation measures and slow judicial process. Moreover, India cannot reach 9 per cent growth rate depending on the domestic market alone; its export share in the global economy and with China its largest trade partner, has little to commend it.

Another differentiator is that China has been ruled by strong leaders with little respect for people’s rights. Now India has a strong Prime Minister. How much and how quickly he will be able to swing the economy remains to be seen.

YG Chouksey

Pune

Using, abusing

This refers to ‘Ringing in social good’ by Elango Thambiah (January 22). As rightly said, the influence of a social object has never been as strong as that of a mobile phone in our everyday lives. It has revolutionised human existence. It is another matter that more Indians have access to a mobile phone than to a toilet.

But its overusehas become a real bother. Before its advent, people used to read in their spare time or while travelling or waiting. These days reading has yielded place to ‘mobiling’. Sometimes sitting near an indiscreet cell phone user is bothersome. Mobile phones are not only noise polluters but also silent thieves of time and money. It is a veritable killer on the road. Despite all these, going anywhere without an cell phone has become unimaginable.

It all boils down to how discreetly we use it. Let us not reduce the value of a mobile phone by overusing it.

CG Kuriakose

Kothamangalam, Kerala

No political will

American Express’ decision to cut costs by terminating the services of 4,000 employees worldwide despite an increase in vital business parameters like earnings per share and revenues, is the outcome of a slow economic growth rate and future apprehensions of negative sentiments at the macro level accentuated by lack of political will.

Vikram Sundaramurthy

Chennai

Don’t tamper with PF

It is learnt that the Centre is contemplating a move to reduce or waive mandatory PF contributions by employees in certain cases. PF is the only saving of employees for rainy days. The Centre should not tamper with the ‘forced saving’ culture, which not only safeguards the future of employees and their dependants but also enhances investments, employment and income in the economy.

S Ramakrishnasayee

Ranipet, Tamil Nadu

Good analysis

This refers to your editorial, ‘Growth illusions’ (January 22). It has been well analysed that though the growth rate of India may surpass that of China, there are challenges to catch up with China’s cumulative growth. So the action points are as follows: Firstly, the government must adopt suitable measures to increase the savings rate of the community by offering proper incentives to spur employment and savings and reduction in inflation rate. Secondly, investment in education and the health sector has to be improved to match China’s literacy level of 95 per cent and reduce infant mortality rate.

S Kalyanasundaram

Email

The superior social indicators of China had lifted the labour productivity of that nation. China’s literacy level is 95 per cent, and that of India 74 per cent. Our infant mortality rate of 43 per thousand live births is thrice that of China. China’s growth has been attended by an improvement in human capital. As the editorial mentions we should consider a real ‘growth plus’ pragmatic and practical approach.

One of the pre-requisites for sustainable growth is savings. China saves 51 per cent of the national GDP presently, whereas in India it is only 30 per cent of GDP. India can bring its savings back by boosting employment and controlling inflation. All the savings are not transformed into investment.

China’s labour costs are rapidly rising. India must leverage the competitive advantage in labour as key aspect of manufacturing impetus. If India runs up a growth rate of 8-9 per cent in the next decade the prediction of OECD, World Bank and the IMF that India would overtake China will become a reality and will begin to show the trend within two or three years.

TV Jayaprakash

Palakkad, Kerala

Safe deposit charges?

An SMS alert about an ATM withdrawal using my ATM debit card from my SB Account with SBI concludes with the following warning: Free SBG ATM txns if AMB>25000.

A quick surfing of the SBI website did not make me wiser about the change in the charges for using ATM cards. Recent media reports indicate varying practices among Indian banks with regard to allowing free ATM transactions and use of other bank ATMs. In the deregulated scenario this is normal.

Still, there is a need for transparency with regard to transaction costs, especially about fees recovered for withdrawal of cash from SB accounts, balances in which earn very low interest. The RBI too has a responsibility here as ATM debit cards are being issued irrespective of request or need. If costs justify charging fees for card transactions, the better option would be not to burden account holders who are not able to maintain a reasonably high average minimum balances with additional expenses on ATM cards. Otherwise, balances in small accounts will get wiped out without any withdrawal by account holders, but by banks charging service charges which would mean ‘safe deposit charges’ for cash kept with the bank.

MG Warrier

Thiruvananthapuram

Send your letters by email to bleditor@thehindu.co.in or by post to ‘Letters to the Editor’, The Hindu Business Line, Kasturi Buildings, 859-860, Anna Salai, Chennai 600002.

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