Is India really shining?

Recent reports from varied sources such as the Reserve Bank of India (RBI), International Monetary Fund (IMF) and several rating agencies and merchant banks that the Indian economy is poised to register a growth rate that could be as high as 7 percent have given rise to a self-laudatory mood. A recent article "Can India overtake China?", in the prestigious US journal Foreign Policy, co-authored by Yasheng Huang and Tarun Khanna accounts for a good bit of the gloss on it. Both come with impressive credentials. Huang is an associate professor at MIT's Sloan School of Management, and Khanna is a professor at the Harvard Business School. But it is Huang who, by virtue of being an ethnic Chinese, gives the article its special credibility. While 7 percent is good, evidence suggests that the underlying basics of the Indian economy remain unchanged. Nothing makes this more explicit than a comparison with the economic and social indicators of China after the economic reforms. Far from catching up with China, India seems to be falling well behind.

We must not forget that 7 percent comes after a year of 4.6 percent, preceded by performances of 5.7 percent and 3.9 percent, which shows the average growth rate to still be in a low trajectory. But even if we accept that India is indeed 'shining', how good is that shine? Is it a burnish that reveals the quality of the metal beneath or is it a thin coat of varnish that just puts a superficial gloss? To understand that we must go into how good the years after the so-called reforms have been. Very simply, the decade after the launch of the so-called reforms has not been very much better than the decade before it. Gross National Product (GNP) growth for the post-reform period (1992-01) crept up by a mere 0.2 percent to 5.9 percent. With a performance like that it would be extremely difficult to make a case that the economic reforms or liberalisation, call it what you will, have made much of an impact on the nation as a whole.