India,China and a growing gap

The hope that India might overtake China one day in economic growth now seems a distant one. But that comparison is not what should worry Indians most. The far greater gap between India and China is in the provision of essential public services — a failing that depresses living standards and is a persistent drag on growth.

Inequality is high in both countries,but China has done far more than India to raise life expectancy,expand general education and secure healthcare for its people. India has elite schools of varying degrees of excellence for the privileged,but among all Indians or older,nearly one in every five males and one in every three females are illiterate. And most schools are of low quality; less than half the children can divide 20 by 5,even after four years of schooling.

India may be the world’s largest producer of generic medicine,but its healthcare system is an unregulated mess. The poor have to rely on low-quality — and sometimes exploitative — private medical care,because there isn’t enough decent public care. While China devotes 2.7 per cent of its GDP to government spending on healthcare,India allots 1.2 per cent.

India’s underperformance can be traced to a failure to learn from the examples of so-called Asian economic development,in which rapid expansion of human capability is both a goal in itself and an integral element in achieving rapid growth. Japan pioneered that approach,starting after the Meiji Restoration in 1868,when it resolved to achieve a fully literate society within a few decades. As Kido Takayoshi,a leader of that reform,explained: “Our people are no different from the Americans or Europeans of today; it is all a matter of education or lack of education.” Through investments in education and health care,Japan simultaneously enhanced living standards and labour productivity — the government collaborating with the market.

Despite the catastrophe of Japan’s war years,the lessons of its development experience remained and were followed,in the post-war period,by South Korea,Taiwan,Singapore and other economies in East Asia. China,which during the Mao era made advances in land reform and basic education and healthcare,embarked on market reforms in the early 1980s; its huge success changed the shape of the world economy. India has paid inadequate attention to these lessons.

Is there a conundrum here that democratic India has done worse than China in educating its citizens and improving their health? Perhaps,but the puzzle need not be a brainteaser. Democratic participation,free expression and rule of law are largely realities in India,and still largely aspirations in China. India has not had a famine since Independence,while China had the largest famine in recorded history,from 1958 to 1961,when Mao’s disastrous Great Leap Forward killed some 30 million people. Nevertheless,using democratic means to remedy endemic problems — chronic undernourishment,a disorganised medical system or dysfunctional school systems — demands sustained deliberation,political engagement,media coverage,popular pressure. In short,more democratic process,not less.

In China,decision-making takes place at the top. The country’s leaders are sceptical,if not hostile,with regard to the value of multi-party democracy,but they have been strongly committed to eliminating hunger,illiteracy and medical neglect,and that is enormously to their credit.

There are inevitable fragilities in a non-democratic system because mistakes are hard to correct. Dissent is dangerous. There is little recourse for victims of injustice. Edicts like the one-child policy can be very harsh. Still,China’s present leaders have used the basic approach of accelerating development by expanding human capability with great decisiveness and skill.

The case for combating debilitating inequality in India is not only a matter of social justice. Unlike India,China did not miss the huge lesson of Asian economic development,about the economic returns that come from bettering human lives,especially at the bottom of the socio-economic pyramid. India’s growth and its earnings from exports have tended to depend narrowly on a few sectors,like information technology,pharmaceuticals and specialised auto parts,many of which rely on the role of highly trained personnel from the well educated classes. For India to match China in its range of manufacturing capacity — its ability to produce gadgets of almost every kind,with increasing use of technology and better quality control — it needs a better-educated and healthier labour force at all levels of society. What it needs most is more knowledge and public discussion about the nature and the huge extent of inequality and its damaging consequences,including for economic growth.

The writer,a Nobel laureate,is a professor of economics and philosophy at Harvard University,US

The New York Times