India, China take different paths to development

By Bharat Jhunjhunwala

NEW DELHI (JP): India often has been advised to follow the path of China. Though China has done well in the last decade, it would be a disaster if India were to follow it. China's approach can be called two-quick-steps-forward-one-slow-step-back. India's approach, in contrast, can be called one-slow-step-forward. The end result of both approaches turns out to be quite similar. But in the short-term, China appears to be ahead with her two-quick steps.

Buddhist philosophy has two streams of thought which typify these two different approaches. Mahayana asks the seeker to work for the betterment of the world. The seeker is advised to dissolve his ego for the common good. Chinese governance is closer to this system. The Chinese follow their leader rather unquestioningly. Policy corrections are secured by the leader self-correcting himself as mistakes become clear, propelled as he is by a deep desire for the betterment of his people.

Hinayana, on the other hand, asks the seeker to withdraw from the world and seek individual salvation through meditation. Hindu philosophy advocates much the same thing. It adds, though, that the seeker should resist the tyrannous ruler. Policy corrections are secured through friction between the rulers and the seekers, the brahmin, who resist them. Faced with incessant questioning by the brahmin, leaders are unable to make quick decisions. Yet, slowly emerges a decision which is rather close to the correct path.

China has a history of mighty reversals, while India has tales of slow actions. In the 1950s, the Communist government of China organized agriculture into cooperatives. The cooperatives subsequently were merged into about 25,000 communes. In many cases even small private plots of land were abolished. At the time this move was heralded as a great advance.

In his Chinese Road to Socialism, pro-Communist author Wheelwright says "there were solid achievements by the communes and more than 16.5 million mou of land were brought into irrigation. A 30 percent increase (in agricultural production) was probably achieved." But then the production faltered and Deng Xiaoping broke the land up into small private farms in the early 1980s. The quick action of cooperativization was followed by a slow reversal.

India's land reform program, on the other hand, was slow to take off. India debated the program for 10 years and took another 10 to implement it. Large farms were broken up and small private farms were established. The end result in both cases was the same, however different the approach.

In the mid-1950s China embarked on an ambitious program of small-scale industrialization called the Great Leap Forward. The most exciting feature of the program was Mao's call to make iron in every backyard. Similar small factories were established to produce acid, soda, fertilizers, pesticides and coal. This effort, however, could not be sustained. Peasants found themselves overburdened with work. The quality of their output was poor and the costs high. In the early 1960s this policy was reversed. The New Economic Policy was put in place, establishing large, state enterprises. These enterprises are now being privatized and China has, for the present, adopted a mixed economy.

In contrast, it took Indian rulers 10 years to decide to establish steel plants in both the private and public sectors. These plants still produce steel, often at internationally competitive prices.

In the mid-1960s Mao unleashed the Cultural Revolution. University professors were labeled bourgeois and sent to perform manual work and learn from the people. In the 1980s these same professors were reinstated. For more than two decades the professors and their knowledge in the universities were lost. In contrast, Indian universities, howsoever slowly established, have continued to churn out graduates at a regular rhythm.

The Chinese Mahayana-type of governance is characterized by a deep concern for the welfare of the people. It is matched by an equally strong veneration of the state by the people. The government makes quick decisions and the people follow them. As errors become clear, the leadership changes course and again the people follow. Growth occurs in spurts of two-quick-steps-forward-one-slow-step-back. Quick results were achieved when land was collectivized, backyard steel production was begun and professors were sent to perform manual labor. In the end, however, these policies were reversed and China reached much the same point as India -- land was parceled out in small private farms, private and state enterprises coexisted side by side and standard teachers churned out standard graduates.

India's Hinayana-type of governance is much slower and often appears fractured. People discuss, debate and criticize endlessly. Each person follows his own self-interest. The friction between the rulers and the people is an essential part of India's governance.

Both approaches have sustained the countries through five millennia. It is not, therefore, a question of right or wrong. It is a question of which approach suits which mind-set. If the Chinese were to debate endlessly as Indians do, it would lead to as many problems as if Indians were to make quick decisions. A lion must behave as a lion and not follow the elephant.

At present, China appears to be ahead in the race. Its growth rate is higher as are its achievements in health and education. But it is also saddled with a huge implicit liability of foreign investment. Its indigenous business and financial structures are weak and a few years down the road some of these policies may be reversed. In the end, it is difficult to say who will be ahead.

The writer obtained his PhD in economics from the University of Florida. He taught at the Indian Institute of Management. Presently he is freelance columnist based in New Delhi.