Newsweek's India Special

It's one of those India-China comparisons all over again. But in fact, Fareed Zakaria's cover story in Newsweek on India's growing influence in the global economy is impressive. The reason I say this is because he does not lavish generous and effusive praise on the boom times that India is experiencing right now but effectively tempers it with words of caution relating to India's socialist era fear of the private sector.

He rightly calls Nehru a failed economist but hails his legacy of granting political freedom. Sadly his daughter, Indira would later strike a blow at democracy's roots by imposing a poorly reasoned emergency and also driving us deeper into the socialist model by nationalizing banks. It took a country mired deep in debt and on the brink of economic collapse (who can forget media-hyped pictures of gold being shipped out of the country?) to finally see the light and open up its economy. The current boom is a clear reflection of the good deeds done by Manmohan Singh, Chidambaram, etc. during the dark early nineties.

Across the Himalayas, China has been busy scripting a monster growth story and regularly posting 10% growth rates and emerging as the world's second-largest economy. But as Fareed points out, China's style of functioning in a dictatorial manner might break down under its own weight. Gurucharan Das's Elephant Paradigm aptly suits India's economic growth - slow and lumbering but nevertheless headed in the right direction with adequate leeway for caution. Marginal Revolution also suspects the longevity of China's rapid growth due to lack of private enterprise's share in the nation's economy. "A research report by the financial firm UBS argues that the private sector in China accounts for no more than 30 percent of the economy" whereas publicly-owned firms account for less than 7 percent of GDP. The lack of political freedom and suppression of freedom of expression, according to me, is a festering and simmering discontent that might just blow up in the Communist Party's face before it can overcome it like they way they did to Tianmmenn Square.

I also loved Fareed's handling of the brain drain phenomenon when he simply relabeled it as brain gain wherein "Indians abroad have returned to India with money, investment ideas, global standards, and most importantly, a sense that one could achieve anything" (my brother will personally attest to the truth in that statement). These people are the ones who are challenging the erstwhile popular joke (disguised for being a harsh truth) that Fareed cites - why is that Indians seem to succeed everywhere except in their own country? There can be no greater justification for liberalization than the fact that the above 'joke' is increasingly proven wrong e.g. Infosys, Wipro, etc.

On the eve of Mr. Bush's visit to India, other articles by Ramin Setoodeh, Keith Naughton, and Jhumpa Lahiri make this India-centric issue a great read. Of course, they had to have the perfunctory cow picture too. I absolutely loved the picture of three middle-aged ladies with balls err...bowling balls.

crossposted on Nerve Endings Firing Away