Slice China’s growth and the contrast gets starker. Its manufacturing-driven economy has piled up foreign exchange reserves in excess of $3 trillion, half again as much as India’s current GDP. And this mountain will keep growing as its trade surplus endures, despite Beijing — like New Delhi — having to scour the globe for energy. India, on the other hand, is grappling with mounting fiscal and trade deficits. More importantly, its recent high growth has been jobless, a big chunk of its population trapped in agriculture as factory employment simply did not keep pace. This strains government finances as poverty reduction is driven by handouts rather than new employment avenues. The advantages of outsourcing are self-limiting and no country has broken into the ranks of developed nations without an industrial revolution.
The alternative development paths chosen by Beijing and New Delhi have a bearing on the physical and social infrastructure of the two Asian neighbours. China has most of its ports, highways and power plants in place to sustain a steady state of growth. It is touch-and-go for an India beset by shortages in its electricity grid and transport networks. Life is indeed better across the Wall with gains in poverty reduction, health and education that India can only fantasise about. It is 33 notches above India in the World Bank’s latest human development index. This is a yawning gap given the populations of both countries. The message is clear: social engineering can’t hope to match economic growth in improving the lives of the people. Although their political compulsions differ, China has provided India with a template for development that holds key lessons.